18 Former Fed Consumer Advisory Council Members Want An Independent CFPA (Campaign for America's Future)

By Richard Eskow
March 16, 2010

Eighteen former members of the Federal Reserve’s Consumer Advisory Council (CAC) strongly endorsed the idea of an independent Consumer Financial Protection Agency in a letter released last week . Draft legislation released yesterday by Sen. Chris Dodd would instead place the CFPA in the Fed, an idea that the former CAC members specifically rejected.

The letter says that "The Federal Reserve has its hands full with responsibilities relating to safety and soundness and monetary policy." It singles the Fed out for special criticism in its handling of consumer issues under both Democratic and Republican administrations: "In 1994 Congress gave the Federal Reserve the power to outlaw unfair and deceptive practices in the mortgage market. The Federal Reserve waited until 2008 to issue their rule, long after the problem had become a crisis and after the market had collapsed. During that time, we and other consumer protection experts issued reams of comment and testimony calling on them to exercise their authority to protect consumers."

The full text of the letter is below:

Friday, March 12, 2010

Senator Chris Dodd

448 Russell Building

Washington, DC 20510

Dear Senator Dodd,

We the undersigned current and former members of the Federal Reserve’s Consumer Advisory Council (CAC) are writing to express our support for a strong and independent Consumer Financial Protection Agency (CFPA), not housed within any other existing agency. Even an agency such as the Federal Reserve, which already has a Division of Consumer and Community Affairs which includes the CAC and direct input from consumer advocates, has competing priorities that undermine its ability to strongly enforce consumer protections.

Our service advising the Federal Reserve on consumer protection issues spans two decades. Those of us who are currently serving on the CAC are raising these concerns in that forum. Many of us have met with Federal Reserve Chairman Alan Greenspan and Chairman Ben Bernanke over the years to express our concerns about how consumers have been treated by financial institutions. Collectively, we raised concerns about unfair and deceptive mortgage lending, overdraft fees, credit card abuses and a host of other consumer lending abuses. We proposed ideas for consumer protections that we felt were necessary given what was happening in the capital and credit markets. The foreclosure crisis and the credit crunch bore out our concerns, but we take little comfort in being right.

However, given the validity of our concerns, we think it would be imprudent to give the Federal Reserve or any other existing agency primary consumer protection responsibilities. No agency, including the Federal Reserve, has a strong record in this regard. In 1994 Congress gave the Federal Reserve the power to outlaw unfair and deceptive practices in the mortgage market. The Federal Reserve waited until 2008 to issue their rule, long after the problem had become a crisis and after the market had collapsed. During that time, we and other consumer protection experts issued reams of comment and testimony calling on them to exercise their authority to protect consumers.

The Federal Reserve has its hands full with responsibilities relating to safety and soundness and monetary policy. Consumers will be served only by having the CFPA as an independent agency where the primary responsibility is consumer protection. We urge you reconsider your proposal for the CFPA to be within any other agency.

Sincerely,

Stella Adams

SJ Adams Consulting

Durham, North Carolina

 

Malcolm M. Bush

Chicago, Illinois

 

Constance K. Chamberlin

President & CEO

HOME of Richmond

Richmond, VA

 

Kathleen Engel

Professor of Law

Suffolk University

Boston, MA

 

Thomas P. FitzGibbon, Jr.

Principal

BSI

Glenview, Illinois

 

Dwight Golann

Professor of Law, Former Chair of the CAC

Suffolk University

Boston, MA

 

Ken Harney

Syndicated Columnist

Washington Post Writers Group

 

Kirsten E. Keefe

Staff Attorney

Empire Justice Center

Albany, NY

 

Sarah Ludwig

Co-Director

Neighborhood Economic Development Advocacy Project (NEDAP)

New York, New York

 

Ruhi Maker

Senior Staff Attorney

Empire Justice Center

Albany, NY

 

Patricia McCoy

Professor of Law

University of Connecticut School of Law

Hartford, Connecticut

 

John Taylor

President & CEO

National Community Reinvestment Coalition

Washington, DC

 

Dory Rand

Executive Director

Woodstock Institute

Chicago, Illinois

 

Elizabeth Renuart

Assistant Professor of Law

Albany Law School

Albany, NY

 

Hubert Van Tol

Director of Economic Justice

Pathstone

Rochester, NY

 

Alan White

Assistant Professor

Valparaiso University Law School

Valparaiso, Indiana

 

Marva E. Williams

Chicago, Illinois

 

Ted Wysocki

President & CEO

LEED Council

Chicago, IL

 

Robert Zdenek

Consultant

Common Bond

Westfield, New Jersey

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