For Immediate Release:

Friday, December 11, 2009

AFR: Minnick Amendment Would Gut Financial Reform Package;

House Must Defeat Big Banks Attempt To Undermine Reform

Washington, DC – Americans for Financial Reform released the following statement on Congressman Walter Minnick’s amendment to HR 4173, “The Wall Street Reform and Consumer Protection Act of 2009”:

Congressman Walter Minnick has introduced an amendment that would eliminate an essential component of this important financial reform bill – the Consumer Financial Protection Agency – and replace it with a weak and bureaucratic council of the same regulators who have failed so spectacularly to protect American families and the economy from abusive financial practices.

Heather Booth, Director, Americans for Financial Reform:

Today, Congressman Walter Minnick, and anyone else who votes for this amendment, will be doing the bidding of the big banks and supporting their efforts to gut financial reform and scrap the much needed Consumer Financial Protection Agency.  If they are successful, we are gravely concerned that this legislation may be left without sufficient meaningful reform to merit support.

Last night, amendments that would have provided for meaningful derivatives regulation were defeated at the behest of the big Wall Street banks. It is astounding that after causing a global financial meltdown the Big Banks believe that they should be able to continue conducting business as usual.  Today, Congress must say no to this proposition and vote for Main Street, not Wall Street.  We hope and expect that they will.

Americans for Financial Reform, and our more than 200 coalition partners strongly oppose the “Consumer Financial Protection Council,” for the following reasons:

• It not only doesn’t improve existing failed consumer protection structure, it makes it worse.  First, the amendment leaves enforcement of consumer protection and fair lending laws in the hands of the same “alphabet soup” of federal regulatory agencies that were on watch while subprime mortgage lenders and credit card companies ran wild.  Then, it creates an elaborate, multi-layered consumer protection bureaucracy of 11 different state and federal regulators who must approve all regulatory changes.  This process will make it more difficult and more time consuming for existing regulators to act to protect consumers and enforce civil rights laws, even when they want to.

• It is a recipe for gridlock and inaction on consumer protection.  Any change in consumer protection rules must be approved by a majority of the Council’s members.  Any recommended change that might result in a dangerous product or service being directly or indirectly prohibited requires a two-thirds vote of the Council.  A reasonable reading of this requirement would mean that the Council would have to approve by two-thirds any rule that would materially interfere with the provision of any credit product.

• It continues the existing fractured, fractious, failed regulatory structure.  No single agency will be charged with making consumer protection a priority.  Consumer protection continues to be subsumed within agencies with many other priorities and a focus on protecting bank profits.  Although agencies will be required to ensure that consumer protection is of “equal importance” with other priorities, it provides no funding to make this happen, so the requirement is virtually meaningless.  Moreover, this requirement could actually be used as an excuse to prevent an agency from making consumer protection enforcement MORE important than other obligations at times.

• The Minnick amendment favors financial institutions with significant resources to influence policy, by making the existing consumer protection bureaucracy larger and more complicated, rather than more focused and streamlined (as proposed with the CFPA).

Today, the House of Representatives will face a major test. Will it stand up to the Big Banks, and their allies in Congress, and pass meaningful reform that will rein in Wall Street and protect consumers or will they allow the Big Banks to continue with business as usual. We urge the House to reject the Minnick amendment and pass HR 4173.  As the legislation moves forward it must be strengthened by regulating derivatives, including the Community Reinvestment Act and democratizing the Federal Reserve.”

###