Arizona PIRG Applauds U.S. House Committee Vote to Advance Landmark Consumer Agency to Replace System that Failed

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Calls for Changes to Special Interest Loopholes for Car Dealers, Credit Life Insurance Firms, Others

Arizona PIRG

Today, the U.S. House Financial Services Committee approved landmark reform legislation establishing a proposed Consumer Financial Protection Agency (CFPA), despite attacks from industry opponents. Although several exceptions to the agency’s coverage must still be addressed on the House floor or in the Senate, overall, according to the Arizona Public Interest Research Group (Arizona PIRG), the CFPA bill as passed creates an independent agency with broad authority to protect consumers in the financial marketplace.

“Consumers need protection from unfair financial marketplace practices, protection that they have not received from the regulatory system that failed and left our economy in ruins,” said Diane E. Brown, Executive Director of the Arizona Public Interest Research Group (Arizona PIRG).

Brown added that the Consumer Financial Protection Agency, as passed, has authority to write rules for all financial products and to enforce those rules if violated. Although smaller banks and credit unions will have primary enforcement by their current regulator, the CFPA will write all the rules and has authority to step in over those primary regulators when they fail to do their jobs as well as to enforce them over all bigger banks and all non-banks.

 “It is critical that the CFPA’s provision re-establishing federal law as a floor not ceiling of protection, which allows states to pass stronger laws, remains as the bill moves further through the legislative process,” Brown added.

Arizona PIRG also warned that a few special interests did succeed in adding loopholes to the bill that must still be addressed as the bill moves forward: “Even though many car dealers make unfair and discriminatory loans, an amendment added to the bill would exempt them from most coverage and may even allow them to make unregulated payday and predatory loans,” added Brown. “Further, over-priced credit life, disability and unemployment insurance will continue to be carved out from full consumer protection under a committee-approved amendment.”

The Consumer Financial Protection Agency is supported by President Obama as a core piece of his financial reform platform. The bill must still be considered by the House Energy and Commerce Committee and the full House as well as the Senate Banking Committee and the full Senate.

“Despite massive efforts by the big banks and Wall Street, there is still a good chance for final passage this year of strong legislation creating a tough consumer agency to replace the broken regulatory system that failed to protect taxpayers,” Brown concluded.