If you are…
- Paying off credit cards that are charging you from 16% to 300% interest and penalties,
- Forced to use payday loans with interest rates over 200%,
- Unable to find credit to pay your household bills, and
- A small business owner dependent on credit cards to pay your operational expenses and increased health care insurance for you, your family and your employees
Then you know that Senate banking reforms need to kick-start small businesses and protect our families.
With financial reform slowing to a crawl in the Senate, there is more at stake than bailouts and bonuses: the continued wrangling is damaging the future of our region’s small businesses. On the chopping block is the Consumer Financial Protection Agency, the cornerstone of the financial reform effort and a rare opportunity to keep the financial products that fuel small business growth and job creation safe, sustainable, and most importantly, available.
This proposed agency promises to streamline the confusing and inefficient consumer protection rulemaking and enforcement patchwork. This is the same process of crossed wires and short circuits that allowed credit card companies to evade existing consumer protections and let existing regulations, such as consumer protections for tax refund loans, go unenforced. Passing out of the House last year with support from many pro-growth Illinois Democrats, this new agency has come under fire in the Senate and could end under the supervision of the same banking regulators that looked the other way during the build up to the current crisis.
Perhaps most importantly, this new agency would bring back teeth to the Community Reinvestment Act, which ensures that financial institutions make safe and sustainable banking products available to the communities in which collect deposits–including the women- and minority-owned businesses that my organization serves.
Languishing under the supervision of regulators that have done little to bring the 1973 act up to speed with modern retail and small business banking practices, this lax enforcement is more than a fair lending issue- it is at the very center of any future economic recovery. Women and people of color make up a growing percentage of small business owners-almost 50 percent of all businesses in the U.S. Yet, financial institutions deny loans to women-owned and minority-owned businesses at a higher frequency than to other businesses with similar characteristics. Enforcing and modernizing it under a new, independent financial protection agency is both good policy and good economic development practice.
We need a strong consumer financial protection agency to make sure all financial products are safe, just as we have ones for the food we buy and the medication we depend on. This new agency must be independent and have a dedicated funding stream that allows it to make tough and possibly unpopular decisions. Further it deserves a staff that is not entrenched in the regulatory status quo that has repeated failed to use its existing authority to protect consumers while ignoring the signs of future problems. Structured as such, we can expect financial products that work for consumers, small businesses, and the economy. Stuck with the baggage of a broken regulatory structure and we will surely fair far worse.