U.S. Treasury: We Need the CFPA!
We’ve written a lot lately about the need to create a Consumer Financial Protection Agency. But it’s not just us and other consumer advocates who have been promoting this cause. The following excerpts from a recent speech by Deputy Treasury Secretary Neal Wolin make the case very effectively:
This financial crisis was rooted, in no small part, in a basic failure of our consumer protection regime….[M]illions of Americans were misled by unclear disclosures, overly complicated contracts, or loan originators incented to close the deal without regard to the borrower’s ultimate ability to pay. The result was tragic – and helped destabilize the entire financial system.
No one can look back at the events of the past two years and say that fundamental reform is unnecessary. And we cannot achieve fundamental reform within the current framework of diffused responsibility, with rule-writing and enforcement divided among a variety of supervisors with different missions and other priorities. We need structural reform.
In designing our reforms, we have been guided by at least two core principles:
First, rule-writing and enforcement should not be separated. We’ve seen all too clearly that separation of rule-writing authority from enforcement authority leads to inertia, unevenness, and erosion of standards….
Second – but closely related to the first – supervisory authority should not be split among various regulators. More specifically, we should not leave banks to be supervised by one agency or set of agencies and non-banks by another. If we do, standards will ultimately diverge, and market activity will migrate towards the lower standards. There must be a level playing field.
A single, independent consumer protection agency is essential to satisfy those core principles. The CFPA will have the authority to write and enforce rules to promote transparency, simplicity and fairness – for all market participants.
The CFPA will also be charged with promoting innovation, choice and fair competition. We value deeply America’s vital tradition of innovation, and we reject the false choice between innovation and consumer protection.
We at AFFIL couldn’t agree more. If you agree too, please click here and let your elected representatives in Congress know how you feel.
Action now is particularly timely, as the House Financial Services Committee has scheduled action on the proposed CFPA legislation next week. To send a message of support for the Consumer Financial Protection Agency, click here.
(Photo: D 3 San Francisco)
Americans for Fairness in Lending 
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