We Oppose S2155, Senate Banking Bill Is Not A Consumer Protection Bill

We've sent a letter up to the Senate Banking Committee urging opposition to a bi-partisan proposal to roll back certain protections for consumers seeking mortgages and also certain safety-and-soundness protections enacted to give prudential regulators more authority to prevent large -- but not the largest -- banks from taking on too much risk. The bill will likely be voted on Tuesday.

Tomorrow the Senate Banking Committee will begin and likely complete a markup vote of S2155, the Economic Growth, Regulatory Relief and Consumer Protection Act. Our opposition letter. While the bi-partisan bill does not take a bludgeon to consumer protection, as the Financial Choice Act passed by the full House does, it does dramatically reduce protections for consumers in the mortgage marketplace while eliminating prudential safeguards applicable to many super-regional banks. Banks of that size were prominent in the financial crisis of 2008. Excerpt from our letter:

First, we are disappointed that the bill claims to be a consumer protection bill. Its housing and mortgage provisions are largely harmful to consumers. Its other supposedly countervailing but small consumer provisions, even if improved by amendments, do not in any way make the rest of the bill acceptable as a consumer protection bill.

Second, the regulatory relief it does provide poses risks to the economic growth it purports to obtain. The relief it promises to small community banks is premised first on the notion that small banks are suffering due to the Dodd-Frank Act. In fact, the consolidation in the industry, though widely blamed on Dodd-Frank, was not caused by the act. According to Federal Reserve economists, bank consolidation has been occurring at a steady pace since at least 1984 

Third, the relief it provides to massive regional banks takes away important tools, some long-standing and some granted prudential regulators by Dodd-Frank after the 2008 collapse. Members should recall that other – now failed – similarly-sized super-regional banks proved to be active participants in the events leading to the 2008 collapse.

Our letter goes on to express disappoint at the four modest, barely incremental provisions that allow the sponsors to call the bill a consumer protection bill.


Ed Mierzwinski

Senior Director, Federal Consumer Program, PIRG

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.