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Resource Spotlight
Daily Reporter: Ohio groups back Congress' concept of Consumer Financial Protection Agency
By Jackie Nash, Daily Reporter Staff Writer
Daily Court Reporter, March 9, 2010
Business organizations and interested parties statewide are backing national efforts encouraging U.S. senators to help bolster businesses and consumers by creating a Consumer Financial Protection Agency.
Discussions about establishing the CFPA have been in the works since last year when President Barack Obama first proposed the agency's creation.
Although the U.S. House of Representatives passed the CFPA bill in October 2009, the U.S. Senate has yet to come to an agreement on legislation. Arguments are centered around the establishment of a stand-alone, independent CFPA - which was passed by the House and is generally opposed by Senate Republicans - rather than a unit within a banking regulatory agency.
Tim Duncan, chairman of the American Business Leaders for Financial Reform, said he believes the CFPA would work most efficiently as an independent agency.
"Businesses and consumers need a CFPA with independent rule-making and enforcement authority, not a weak bureau subservient to regulators concerned with protecting large banks rather than protecting small businesses and consumers," Duncan said.
"Business leaders who care about the long-term success of their companies and our country understand that a healthy economy is based on earnings, savings, trustworthy credit and fair competition - not on ripping off American families and businesses. Inadequate regulation fueled the current crisis and inadequate reform will assure a repeat."
Ohio Attorney General Richard Cordray agreed that the U.S. House's version of the bill is the right approach. He said state attorney generals nationwide have come together to advocate for a consumer protection agency.
Cordray related the CFPA to the Consumer Product Safety Commission that Congress established in the 1970s to keep American households safe from dangerous products.
"The (Consumer Product Safety Commission) has been successful and provided protection for families. ...We also need someone protecting individuals from harmful financial products that are hazardous to their health and well-being," Cordray said.
Bob Keener, business outreach and media consultant for Business for Shared Prosperity, a public policy-focused network of business owners, executives and investors, said the CFPA is needed due to out-of-hand reckless and deceptive credit practices.
These practices have fueled the economic crisis, driven businesses into bankruptcy and homes into foreclosure, destroyed jobs and wealth, and severely undermined communities and economic prospects nationwide, Keener said.
Additionally, several businesses that survived the downsliding economy are now being negatively affected by credit cuts and denials, interest rate and fee hikes, and other financial practices, he said.
However, Keener added, the CFPA would have the authority and accountability to supervise, examine and enforce consumer financial protection laws for businesses nationwide. The agency would monitor several financial transactions, including credit cards, mortgages, student loans, car loans and payday loans, according to Business for Shared Prosperity.
Keener added that the CFPA would especially benefit small businesses - which create most of the nation's new jobs - because small business owners often rely on credit from several sources, such as credit cards and home equity loans.
Manfred Mecoy, spokesman for the Ohio Public Interest Research Group, said Ohio's businesses and consumers are in dire need of the CFPA.
"Ohio was a flashpoint for the collapse of the economy, largely due to predatory lending," Mecoy said, adding that the state will have faced more than 300,000 foreclosures from 2009 to 2012.
In a report released by the Ohio PIRG, the group stated that the financial crisis has not ended, and U.S. homeowners are expected to lose $1.9 trillion in home equity wealth due to 2009-2012 foreclosures.
Mecoy said the PIRG believes the CPFA is the key solution to preventing future financial crises.
"Consumers need protection from unfair financial practices and only the CFPA can guarantee that," said Mecoy.
Copyright Daily Court Reporter 2010
