May 11, 2010
United States Senate
Washington, DC 20500
Re: Support SA 3772 to create Financial Consumers’ Association
Dear Senator:
We write on behalf of Americans for Financial Reform, an unprecedented 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, retiree, community, labor, religious and business groups as well as Nobel Prize-winning economists.
We urge you to SUPPORT SCHUMER amendment 3772 to Title X of S. 3217, which would create a Financial Consumers’ Association (FCA).
The nation’s financial industries have a significant effect on the daily lives of the nation’s consumers. Consumers need both a strong regulatory agency to oversee financial services products and an independent consumer voice to monitor the actions of financial corporations. The FCA would be supported by membership dues. The members would elect a board of directors that could hire researchers, organizers, accountants, and lawyers.
Some observers have asked whether an FCA would be needed if Congress were to create a Consumer Financial Protection Bureau (CFPB). A CFPB would play a fundamental and important governmental role in advancing protections for consumers of financial services. An FCA would enhance, not duplicate or replace, the work of the CFPB. The FCA would monitor government regulators, and provide an independent and complementary voice for consumers. The combined efforts of both the CFPB and the FCA will help to lessen the imbalance of power between financial services corporations and consumers.
An FCA could:
- represent consumer interests before regulatory agencies, legislative bodies, and the courts, and in negotiations with financial service providers;
- advocate policies before regulatory bodies that will ensure reasonable access to credit for all consumers;
- evaluate the performance of mortgage lenders and monitor the availability of financial services to less affluent and minority borrowers; and
- provide policymakers, consumers, workers, shareholders, taxpayers, and the news media with timely information on the effects of financial industry and government initiatives.
An FCA would enhance the influence of consumers in the policymaking process and empower citizens by educating them, uniting them, and giving them a meaningful voice in shaping financial institutions’ consumer policies.
Once an FCA is established, financial institutions would be required to include in their billing and account statement envelopes, and electronic communications with customers, periodic notices informing customers of the existence and functions of the FCA, as well as information on how to become a member.
Legislation has been introduced previously that would require FCA membership notices to be included in the billing envelopes of financial institutions, ensuring that the maximum number of consumers are invited to join and fund such an organization.
In 1985, then-Representative Charles Schumer introduced the Consumer Banking Act of 1985, which contained an FCA provision.1 Mr. Schumer later introduced the “Financial Consumers Association Act of 1990.”2 In 1992, Representative Joseph P. Kennedy introduced similar legislation.3
Just a week before he died, Senator Paul Wellstone introduced the Consumer and Shareholder Protection Association Act of 2002.”4 This legislation had a broader mandate than an FCA—in part because it was designed to deal with the corporate crimes perpetrated by Enron, WorldCom, and other corporations.
Congress should establish an FCA as a congressionally chartered, nonprofit, nonpartisan organization with a full-time staff that could help consumers band together to address financial services issues.
Thank you for your time and consideration.
Sincerely,
Americans for Financial Reform