While strong financial reform bills have passed the House and the Senate, the fight for meaningful reform is not over. This Thursday, House and Senate conferees are slated to start negotiations on the final version of the bill.
We need your help to make sure that the consumer financial protection agency that emerges from the conference is strong and independent, covers all financial products, and sets rules that are a floor, not a ceiling.
Please sign on to the letter below by Wednesday June 9 at 12:00 CDT and tell House and Senate conferees that we need real and effective reform that protects Main Street, not a bill weakened by carve-outs and special interest loopholes.
Contact Tom Feltner at email@example.com or 312-268-0310 to sign on.
We are contacting you as members of the Illinois Community Investment Coalition to express our strong support for a strong and independent consumer financial protection agency with jurisdiction over all financial products, regardless of which institution offers them, and authority to write rules that set a floor, not a ceiling. As representatives of Illinois consumer and community groups, we oppose any attempts to weaken the consumer financial protection agency through actions such as giving prudential regulators veto power over the agency’s regulations, including carve-outs for institutions like auto dealers or payday lenders, and authorizing federal preemption of state consumer protection laws.
1. We need an independent consumer financial protection agency, with a presidentially-appointed director, confirmed by the Senate
Why this is important: This devastating financial crisis was exacerbated by a confusing patchwork of regulations intermittently enforced by regulators who did not have protecting consumers’ interests as their primary goal. This resulted in an environment where regulators did not detect emerging problems, such as predatory subprime lending, before they ballooned into a crisis. Our communities need an agency that has consumers’ interests as its topmost priority and that has the authority to streamline and effectively enforce consumer protection regulations, without being subject to approval from the same bank regulators whose failure to protect consumers in the past had disastrous consequences. A strong and effective consumer financial protection agency must be independent in its leadership, funding, and decision-making and have primary examination, enforcement, and rulemaking authority.
2. The consumer financial protection agency needs authority over products offered by payday lenders and auto dealers; its rules cannot be subject to a veto by the existing regulators that have repeatedly failed consumers
Why this is important: In order to effectively protect our communities, the new consumer financial protection agency must have authority over all financial products. The current inconsistent regulatory patchwork allowed for some financial service providers to be essentially unregulated, even though they provide the same products as regulated banks and credit unions. Abusive and predatory practices flourished in this regulatory safe harbor, stripping billions of dollars of wealth from families in Illinois and throughout the country. Consumers deserve the same protections for their credit cards, auto loans, and mortgages, no matter where the loans are originated. Attempts to carve-out auto dealers and payday lenders must be resisted. Both types of loans often contain deceptive practices or predatory terms that lock consumers in a cycle of debt. Not surprisingly, predatory car loans typically rank first among consumer complaints lodged with state and local consumer protection agencies and the military.
3. State Attorneys General and regulators must be able to enforce new consumer protections
Why this is important: Consumers need “more cops on the beat”—including states—to rein in abusive financial practices. Where federal prudential regulators failed to adequately protect consumers, state Attorneys General and financial regulatory agencies often stepped in as first responders to predatory lending practices. In Illinois, Attorney General Lisa Madigan and the Illinois Department of Financial and Professional Regulation have been leaders in taking on predatory lenders, tax refund lenders, debt settlement companies, and mortgage rescue scams. States need the authority to enforce consumer protection and respond to local needs before they become crises.