Tuesday, February 9, 2010.
contact Bill Roach - 515-281-5536 or bill.roach@iowa.gov

Attorneys General Push Senate to Create
U.S. Consumer Financial Protection Agency

They say independent federal agency with state
enforcement is best for consumers.

Des Moines, Iowa. — State Attorneys General Tom Miller of Iowa, Lisa Madigan of Illinois and Dick Blumenthal of Connecticut today urged the U.S. Senate to pass legislation to create an independent Consumer Financial Protection Agency. The Attorneys General, speaking in a conference call with reporters, said the new agency promises to be an effective check on the excesses of the financial industry that played a major role in creating the current economic crisis.

“Working with the states, this agency will be able to prevent and root out unfair and deceptive practices by the financial services industry,” said Iowa Attorney General Tom Miller, “It’s crucial to protect individual consumers from abuses, but it’s also an important step to protect our whole economy.”

“The current financial crisis was caused at least in part by irresponsible mortgage lending and inadequate oversight,’ Miller said. “This crisis is the best demonstration of the need for better consumer protection and enforcement,” Miller said.

The creation of an agency was proposed by the Obama Administration and passed the U.S. House of Representatives in December. It is now pending in the U.S. Senate

“This measure will fix a crucial problem,” Miller said. “Now, when it comes to mortgages, credit cards and other basic financial matters, protection of consumers is buried and often neglected in federal regulatory agencies that have other priorities, such as overseeing the safety and soundness of banks. This bill would establish a Consumer Financial Protection Agency whose primary mission is protecting consumers.”

The Attorneys General argued that legislation creating the CFPA should explicitly preserve the states’ authority to fight unfair and deceptive practices. Miller said, “The House legislation recognizes the key role that state Attorneys General serve in spotting new frauds and abuses, responding to citizen concerns, and enforcing state laws. It is important to keep those provisions,” Miller said.

“A vote against a strong and independent CFPA is a vote for the big banks and Wall Street and a vote against consumers,” Miller said. “Americans are rightfully concerned and angry about the near-collapse of the economy largely caused by irresponsible banks, Wall Street and other financial firms.”

"Contrary to what the big banks are saying, this will not create a confusing patch-work of regulation,” Miller said. “That argument sounds good but just is not true. What is true is that the legislation will make sure that there are 51 cops on the beat protecting consumers. We have just seen what can happen when there is only one.”

In addition, Miller said that the availability of computer software and other sophisticated compliance tools makes any additional costs of state enforcement negligible. He cited one study that shows the cost of compliance with state anti-predatory lending laws at about one dollar per loan. “That’s a small price to pay to help prevent people from losing their homes to unscrupulous schemes,” Miller said. In addition Miller said, “A large number of businesses in all kinds of industries successfully operate across state lines every day. They follow both state and federal laws and they make a good profit. Why do the big banks think they can’t do the same?” he said.

“This crisis was caused by a lack of effective regulation – not too much regulation. It is important that we learn our lesson and make sure such misconduct can never happen again.”

“I urge the Senate to maintain a strong bill that will be effective in protecting the financial interest of ordinary Iowans and all Americans,” he said, “and I urge the Senate to reject amendments on behalf of special interests to weaken the bill and leave consumers vulnerable.”

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