September 14, 2009
Consumers Union Renews Call for New Consumer Financial Protection
Agency One Year After Lehman Brothers Collapse
Group Says Protecting Consumers is Key to Protecting Financial System
WASHINGTON, D.C. – On the eve of the one-year anniversary of the collapse of Lehman Brothers, Consumers Union urged Congress to move forward with proposals to establish a Consumer Financial Protection Agency (CFPA) as part of a broader effort to toughen regulatory oversight of the financial industry. The House Financial Services Committee is expected to vote on the CFPA in the coming weeks.
The Lehman Brothers bankruptcy last September triggered a free fall on Wall Street and worldwide economic crisis. The complex financial instruments that led to the downfall of Lehman Brothers and undermined the stability of the nation’s banks were based on risky home loans that were poorly underwritten and unsuitable for borrowers.
“The crisis on Wall Street started with a failure to protect consumers,” said Gail Hillebrand, Consumers Union’s Financial Services Campaign Manager. “We need to fix the products, practices, and incentives in the financial system that undermine family finances and the economy. That’s why Congress should create a Consumer Financial Protection Agency whose sole job is to look out for consumers and make sure they are safeguarded from unsafe and deceptive financial products and services.”
The proposed Consumer Financial Protection Agency would ensure that credit, deposit and payment products and services are being offered in a fair, sustainable and transparent manner.
The CFPA would create baseline federal consumer protection standards that apply regardless of the nature of the provider and states would remain free to set higher standards.
More information about the CFPA can be found at: http://www.defendyourdollars.org/2009/07/consumers_union_letter_in_supp.html
Consumers Union also supports the creation of a national bank supervisor to replace the current Office of Comptroller of the Currency and Office of Thrift Supervision, and the creation of a clear set of federal powers and responsibilities for identifying and mitigating potential risks to the financial system. The group has urged Congress to ensure that this central authority has the staffing and resources to monitor sources of systemic risks in institutions and products throughout the financial markets, and the power to act promptly and independently. The group emphasized that the purpose of systemic risk regulation must be to protect the financial system, not to protect large financial institutions.
“After committing billions of dollars to rescue the banks, taxpayers deserve to know that our leaders in Washington are building a strong new system to oversee the financial industry and to prevent the next crisis,” said Pam Banks, Policy Counsel for Consumers Union. “Making sure that consumers are protected from harmful financial products is essential to safeguarding our economy.”
Gail Hillebrand, 415-431-6747 or David Butler, 202-462-6262
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