Despite the House's disappointing passage of a 1,300-page financial regulatory reform bill that includes the misnamed "Consumer Financial Protection Agency" (CFPA), we are encouraged that there is growing recognition that there is a better way to overhaul our outdated, financial regulatory system.
The Senate will soon consider this bill which will have drastic results, ranging from every corner of the economy and delaying Main Street recovery.
As proposed, virtually every business will be affected by the CFPA. If you allow customers to pay with credit, to use a lay-away program, or even to pay in more than one installment, your business would face significant new regulation. Even businesses that are indirectly related to consumer finance, such as sellers of gift cards, advertisers, accountants, homebuilders, utilities and Internet providers will be covered by this sweeping new law.
In addition, the bill would give the government authority to request and hold information about your bank accounts from financial institutions, including how much money is in each account.
This is a drastic affront on the privacy and security of your financial information.
Efforts to enhance consumer protection should focus on weeding out fraudulent actors and predatory products and ensuring consumers have access to clear and concise information about the terms and conditions of products, and the risks they pose. However, this bill actually weakens consumer protection by allowing government to dictate the financial products you can choose, adding new layers of government bureaucracy, imposing new costs on taxpayers, consumers and businesses, and threatening the privacy of personal financial information. This would be a recipe for disaster for our economy and consumers.
Tell Your Senators to oppose the Consumer Financial Protection Agency.
Click Here to Write your Senators. This text is already at the website, and you may edit as you wish:
While I am disappointed by the House's passage of the flawed Consumer Financial Protection Agency (CFPA) Act of 2009, I hope the Senate will advance more effective reforms that will protect investors and strengthen our capital markets without adding new layers of bureaucracy on top of the current system.
We need bipartisan financial regulatory reform legislation to help get our economy back on track, but as the bill currently stands in the Senate, the CFPA will have significant unintended consequences that will harm consumers, rather than protect them.
We already have six federal agencies charged with protecting consumers. Rather than address the failures in regulation that contributed to the current financial crisis, this will create a massive new government agency that will deprive consumers of what they want and need: affordability and choice.
First, the CFPA will reduce my access to credit, my choices among financial products and will result in higher prices for those that are offered. The bill gives the government broad discretion through vague standards to dictate the types of products I can choose from, replacing my own judgment for those of bureaucrats in Washington.
Second, the scope of the bill is broad and sweeping, encompassing nonfinancial businesses simply because of the way they bill their customers, or because they provide goods and services to companies that do engage in consumer finance. The legislation would give the new agency unprecedented authority over businesses across diverse industries that have little to do with consumer finance, and had nothing to do with the financial crisis.
Third, rather than establish a new national standard to simplify and bring uniformity to consumer protection laws, this legislation does exactly the opposite. It will create conflicts among state and federal law, thereby adding to the complexity and confusion for consumers. In addition, complying with an increasingly inconsistent and conflicting regulatory system will impose new costs on businesses, reducing their ability to lend and increasing the costs of products.
Instead, we should improve regulation from the ground-up, ensuring existing regulators have the tools they need to protect consumers. We need legislation that will weed out the bad actors that push predatory consumer products or fraudulently mislead consumers about the products they sell. And we need to simplify disclosures to provide consumers with the information they need in a clear and concise manner that will allow an informed and responsible financial decision.
We don't need another government bureaucracy aimed at deciding what is best for me or my family's financial decisions. And we don't need legislation that will further reduce access to credit when our communities can least afford it.
Please consider the unintended consequences on consumers and the economy. I urge you to support an alternative to the Consumer Financial Protection Agency that will protect consumers and our economic growth.
Please write them today!