VOTE NO ON THE SHELBY CFPA SUBSTITUTE
NO INDEPENDENCE, NO FUNDING FOR ENFORCEMENT,
NO ENFORCEMENT OVER ANY BANKS
NO AUTHORITY TO PROTECT FAMILIES
Dear Senator,
We write on behalf of the over 250 member organizations of Americans for Financial Reform to urge a No Vote on the dangerous Shelby substitute (amendment #3826) to Title X of S. 3217, RAFSA, provision establishing an independent Consumer Financial Protection Bureau. As you know, we are a coalition of more than 250 national, state and local groups who have come together to reform the financial industry. Members of our coalition include consumer, civil rights, investor, labor, retiree, community, religious and business groups as well as Nobel Prize-winning economists.
A consumer financial protection watchdog must be independent of the banks, have its own adequate funding and staff, and not be subject to having its work stopped by any banking regulator. It must be able to police the marketplace in credit and similar financial products and services no matter what type of entity offers those products or services. The Shelby amendment in the nature of a substitute establishing a consumer financial protection division inside the FDIC fails to meet these standards. It is deeply flawed.
NO INDEPENDENCE: The CFPD would be a division in the FDIC without autonomy. It could not even finalize a rule without FDIC approval.
INADEQUATE RESOURCES BY DESIGN: Funding is by assessments sufficient to cover supervisory and rule-making expenses only – not enforcement.
ENFORCEMENT VERY LIMITED
- No enforcement at all over any bank or other type of depository institution.
- Non-mortgage companies never subject to supervision unless they have a pattern or practice of breaking the law within the past three years.
- Not even all non-bank mortgage companies will be covered by supervisory oversight.
- Same limits apply to enforcement unless another federal agency has referred a matter for enforcement.
ABDICATES RESPONSIBILITIES TO ENSURE A NON-DISCRIMINATORY MARKETPLACE: It omits numerous functions and goals relating to civil rights that are part of S. 3217.
There is less to this substitute than meets the eye. It should be rejected. Oppose this amendment and oppose all other amendments to weaken the consumer protection provisions of S. 3217. In particular:
- Oppose amendments to carve-out exceptions for car dealers or any other sellers.
- Oppose amendments to strip state attorneys general of their authority to enforce the law or to expand preemption of state consumer protection laws where there are gaps in federal laws.
The evidence is clear that strong consumer protection measures will also protect the long-term stability of financial institutions, even if these measures impinge on short-term profitability. For example, if the OCC and other banking agencies had paid more attention to the impact of abusive sub-prime mortgage loans on consumers, it would have better protected the solidity of the institutions it regulated as well. It is no longer appropriate to allow prudential regulators to narrowly (and improperly) focus on the short term profitability of the institutions they regulate by rejecting measures that are in the best interest of consumers.
We strongly urge you to reject all proposals to allow prudential regulators to oversee or veto legitimate consumer protection decisions by an independent regulatory agency.
For information: Contact members of the AFR consumer protection committee: Ed Mierzwinski, U.S. PIRG edm@pirg.org; Gail Hillebrand, Consumers Union, hillga@consumer.org; Travis Plunkett, Consumer Federation of America; tplunkett@consumerfed.org; Kathleen Keest, Center for Responsible Lending; kathleen.keest@responsiblelending.org ; Lauren Saunders, National Consumer Law Center, lsaunders@nclcdc.org or Lisa Donner, Americans for Financial Reform, lisa.donner@gmail.com.
Sincerely,
Americans for Financial Reform
Consumer Federation of America
Public Citizen
New York Communities for Change
Consumers Union
U.S. PIRG
National Fair Housing Alliance
Social Investment Forum
National Consumer Law Center
Consumer Action
National People’s Action
National Consumer Law Center
Consumer Watchdog
Center for Responsible Lending