Our letter to the U.S. House of Representatives opposing draft legislation, the so-called Financial Choice Act 2.0, introduced by House Financial Services Committee chair Jeb Hensarling (R), to repeal parts and eviscerate parts of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, including the centerpiece Consumer Financial Protection Bureau.
OPPOSE FINANCIAL CHOICE ACT, GUTS CFPB, ROLLS BACK
WALL STREET REFORM, REPEALS DURBIN AMENDMENT
“Wrong Choice Act” Leaves Consumers, Depositors, Small Investors, Taxpayers
and Economy At Risk of Another 2008 Collapse
On behalf of U.S. PIRG, which serves as the non-partisan, non-profit association of state Public Interest Research Groups nationwide, we write to express our strong opposition to the “Financial Choice Act” and to urge you to oppose this bill. This legislation would be better dubbed “Wall Street’s Choice Act”, or the “Wrong Choice Act” or even the “Cruel Choice Act.”
Have proponents and supporters of the bill forgotten that this September, we will have the 9th anniversary of the second-most extraordinary financial collapse in our nation’s history? Both collapses were driven by Wall Street greed and risk-taking. Millions lost homes, millions lost jobs, and millions more lost trillions in retirement income. Ordinary taxpayers were forced to step in and bail out Wall Street before Congress, nearly two years later and after careful study and debate, in 2010, finally enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act to protect the rest of us. Now, the Financial Services Committee, according to widely-circulated news reports, appears ready to send this dangerous reversal of those critical protections to the floor next month after just one hearing, tomorrow.
The bill, if enacted, would have a devastating effect on the capacity of regulators to protect the public interest and defend consumers and investors from future Wall Street wrongdoing and the economy from financial risks created by too-big-to-fail financial institutions. It sends the wrong signal to the financial sector that unfettered risk-taking – much of it with other people’s money — is in vogue again.
Among other changes, this Wall Street’s CHOICE Act would eviscerate the highly-successful CFPB, which in just under six years of service has returned nearly $12 billion to 29 million victims of financial chicanery, by firms ranging from Wall Street banks to usurious payday lenders and fly-by-night debt collectors:
- The bill completely strips the powers of the Consumer Financial Protection Bureau to stop unfair, deceptive, and abusive practices in consumer markets or to regularly examine banks and financial companies to determine whether they are breaking the law, returning to the regulatory patchwork that failed before the crisis and the CFPB was created to solve.
- The bill destroys the Bureau’s independence by eliminating its independent funding, moving it under the executive branch and subjecting its director to political manipulation by allowing removal for any reason, including no reason. The bill also rejects over 150 years of national policy that bank regulators and the financial system should be insulated from the highly-politicized appropriations process by not only eliminating CFPB’s independent funding, but also that of other bank regulators, including the FDIC, OCC and FRB, as well.
- The bill makes the Bureau’s highly successful statutory Offices of Financial Empowerment, Older Americans, Service Member Affairs and its Office of the Student Loan Ombudsman all “optional,” so a future director could simply eliminate them.
- The bill eliminates the CFPB’s Public Consumer Complaint Database, which would only benefit companies that don’t want to improve their customer service and don’t want to be transparent about their business.
- The bill eliminates the CFPB’s Congressionally-granted authority to ban or regulate arbitration in consumer contracts, which serves corporate wrongdoer Wells Fargo well, as it has been using an arbitration shield to defend itself against its fake-account scandal.
- Incredibly, despite that abusive high-cost small dollar lending is one of the largest financial problems consumers — especially working class families — face, the bill simply removes any authority of the CFPB to regulate or issue enforcement actions against small-dollar lenders. […]