Joe Nocera Column Calling for Consumer Financial Protection Agency

by Jeff Sovern

Joe Nocera has a terrific column in today's Times, Have Banks No Shame?, supporting the Consumer Financial Protection Agency.  The column should be required reading for anyone interested in consumer protection.  Here's my favorite part:

The current bank regulators, [bankers] point out correctly, already have consumer protection as part of their portfolios. “All they need to do is enforce the regulations already on the books,” one top banker told me recently.

Exactly!  But they won't because the existing regulatory structure discourages regulators from enforcing consumer protection.  That's why we need the CFPA--because regulators focused on other matters (safety and soundness, for example) lose sight of consumer protection. And because the existing structure, with financial institutions able to choose which regulator they will be subject to, pits regulators against each other in a competition for financial institutions to regulate.  Regulators competing for financial institutions are not likely to impose strict rules on those institutions; instead, they have every incentive to race for the bottom.  And that is undoubtedly a big part of the reason financial institutions prefer the current system: they would rather control the regulators than be controlled by them.

Comments

[Dining Room Furniture]

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[Wine Online]

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