Financial reform is at a critical juncture in Washington. The House has already passed a bill to create a strong and independent Consumer Financial Protection Agency (CFPA) to put consumers’ interests over those of Wall Street and crack down on the risky lending that spurred the financial crisis. However, Senate Banking Committee Chairman Chris Dodd (D-CT) continues to compromise the agency’s independence in the interest of bipartisan support.
We must ensure that the result of negotiations is not a toothless and ineffectual regulator that lacks the resources and authority it needs to keep financial products safe, sustainable, and available. Although no Senate bill language has been released, rumors indicate that under the Senate compromise, the CFPA would have no enforcement power over non-bank financial institutions like payday and car title lenders who make risky, high-cost loans and are often unregulated by the states. Sen. Richard Shelby (R-AL) believes that safety and soundness regulators should “absolutely” have veto power over a consumer protection agency. We believe that these proposals represent the status quo that has relegated consumer protection to the bottom of bank regulators’ priorities and allowed for risky lending behavior that has drained millions of dollars in wealth from America’s families.
Members of the Illinois Community Investment Coalition (ICIC) will be fighting for a strong and independent CFPA this week in Washington on the Hill and at the National Community Reinvestment Coalition (NCRC) Annual Conference. Along with Woodstock, representatives from Illinois’ financial institutions, nonprofits, legal groups, community organizations, and more will tell our elected officials that real financial reform matters to Illinoisans. We demand a strong and independent CFPA. We need to expand credit to small businesses so they can spur job growth and help turn the recession around. The Community Reinvestment Act (CRA) must be modernized and expanded so that it continues to encourage investment in underserved and blighted neighborhoods in today’s ever-changing financial landscape. And financial products like overdraft protection services and government benefits cards must have sufficient consumer protections. All of these proposals are critical to righting a financial system that has gone awry and ensuring that those families hit hardest by the financial crisis have the opportunity to share in the recovery.