THE NEW AGENCY WOULD ADDRESS THE FLAWS IN THE CURRENT REGULATORY SYSTEM OVERSEEING AND HELPING TO ENFORCE MORTGAGE, LENDING AND OTHER FINANCIAL SERVICES PROTECTION LAWS
President Obama has proposed establishing a new Consumer Financial Protection Agency (CFPA), which would be charged with overseeing consumer protection in the home mortgages and financial services areas. Specifically, the President is proposing that we take all of the agencies that are currently meant to monitor and protect consumers’ interests when it comes to financial products and put them under one agency, thereby consolidating authority in one place with a new emphasis on protecting consumers who might be taking out a mortgage or utilizing another financial service.
Our current system of consumer protection fails to protect American families from the most basic economic abuses that can cost households hundreds of thousands of dollars, and even their homes. Current laws and lax enforcement allow a range of institutions to escape supervision because responsibility for consumer protection is fragmented across too many financial services regulators, with many finance companies not being regulated at all at the Federal level. When regulators have played a role in recent years, they have too often asked “What’s the effect on the financial institution?” without asking “What’s the effect on consumers?” As a result, among other problems, regulators permitted inappropriate mortgages and abusive credit card practices. Sadly, many of the worst abusers focused their most predatory products (and continue to target) low-income families and racial and ethnic minorities.
In the recent economic crisis, too many people lost their savings, their financial security, and in too many cases their homes and small businesses. And, because racial and ethnic minority Americans, as well as senior citizens, were consistently targeted by abusive and predatory lenders, we are, once again, disproportionately feeling the pain of the crisis. As proposed, the CFPA would focus on the core reforms that will address the causes of the current crisis, make the system more stable and resilient and give the government tools to better anticipate, avoid and address a potential future crisis. Also, as drafted by the House Financial Services Committee, the CFPA would be charged with monitoring and working to eliminate attacks on whole communities based on our racial or ethnic background.
The House Financial Services Committee is currently considering legislation that is supported by the NAACP that would establish a strong CFPA and includes several civil rights protections that we had fought for, including the creation of an Office of Fair Lending and Equal Opportunity. We are currently working with members of the committee to ensure that the final version of the legislation stays strong, does not allow the new agency to preempt state consumer protection laws which may be stronger, and includes issues such as car loans, private student aid, and realtors under the new agency’s jurisdiction.
The NAACP encourages all Members of the House and Senate to support the creation of a strong and effective Consumer Financial Protection Agency that protects consumers, all consumers, as they attempt to build wealth and financial security for their futures and their families.
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