May 19, 2010
United States Senate
Washington, DC 20510
VOTE WITH SEN. DODD. OPPOSE ALL ATTEMPTS TO KILL THE CFPB BY 1,000 CUTS
Dear Senator:
We write on behalf of Americans for Financial Reform, a coalition of over 250 national, state and local groups who have come together to reform the financial industry. Members of our coalition include consumer, civil rights, investor, retiree, community, labor, religious and business groups as well as Nobel Prize-winning economists. We support a strong Consumer Financial Protection Bureau (CFPB) and oppose weakening amendments to the Restoring American Financial Stability Act, S. 3217.
We urge you to oppose amendment #4018 from Senator Hatch, which prohibits the Consumer Financial Protection Bureau from issuing rules under any statute unless it can certify that “the costs of the rule will not be borne by the consumer.”
The amendment would kill all rulemaking because every rule imposes some costs of changing unfair practices and the CFPB cannot control how businesses deal with those costs. The entire purpose of a rule is to change industry behavior to stop unfair, deceptive or abusive practices. Adjustments to disclosures, computer programs, employee procedures and other adaptations to new rules always impose some initial costs. The CFPB cannot guarantee industry won’t use new rules as an excuse for raising prices.
The bill already requires the agency to balance benefits and costs, but the amendment would kill rules that impose any costs even if far outweighed by the benefits. Throughout the bill are numerous requirements from the CFPB to consider the costs to everyone, businesses and consumers. It will not adopt rules if they cost consumers more than they benefit them. But even if the rule had tremendous benefits for consumers, a rule could not be adopted if businesses choose to pass their compliance costs on to consumers.
The amendment would have killed new credit card, mortgage and overdraft rules. The amendment applies to rulemaking under the Truth in Lending Act and all the other enumerated statutes. Credit card companies certainly incurred costs in adapting to new credit card rules, mortgage lenders had to adapt to the Federal Reserve’s rules to curb unfair or deceptive mortgages, and banks are implementing new systems and new marketing efforts to adapt to rules giving consumers the choice whether to have expensive overdraft “protection” on their accounts. The Fed could not have certified that businesses will not pass those costs on to consumers.
Vote with Sen. Dodd on all amendments – well intended or subversive – that will kill the CFPB with 1,000 cuts. Many of these amendments are clothed in sympathetic appeals to small businesses, privacy, consumer pricing, and other interest. But these and other amendments would seriously undermine the CFPB’s ability to do its job:
- Enzi #4018 and Enzi-Shelby #4073 requiring the permission of millions of consumers before the CFPB can investigate or examine.
- Snowe-Pryor #3883 giving regulated industries an advance chance to kill or shape new rules before they are proposed.
- Hatch #4081 requiring CFPB to certify business won’t gouge consumers.
Vote with Sen. Dodd in support of a strong consumer agency. For information, feel free to contact Lauren Saunders at (202) 452-6252 x 105 or LSaunders@nclcdc.org.
Sincerely,
Americans for Financial Reform
View the list of AFR Partners here:View the list of AFR Partners here:
http://ourfinancialsecurity.org/about/our-coalition/
All the organizations support the overall principles of AFR and are working for an accountable, fair and secure financial system. Not all of these organizations work on all of the issues covered by the coalition or have signed on to every statement.