by Jeff Sovern
According to the News and Record of Greensboro, North Carolina, here's what one bank president said of the CFPA proposal:
The consequences to the consumer will be equal or worse than what they’re trying to legislate away,” said Robert Braswell, president of Greensboro-based Carolina Bank.
The regulations proposed in the measure would duplicate some limits already on the books, he said.
Banks, he said, will pass on added costs to consumers or stop offering some services, such as free checking. Braswell said when he has been on lobbying trips to Washington on behalf of bankers groups, congressmen and congressional staffers did not seem receptive to points made by those in the industry.
“There is no consideration to (whether it’s duplicative); there’s no consideration as to cost,” he said. “Those who are behind this legislation are absolutely ill-informed and under-educated ... They refuse to consult with anyone who does possess the requisite knowledge.”
I'm not going to bother responding to the idea that Harvard law professor Elizabeth Warren is "ill-informed and under-educated." But I have to say something about the complaint that the measure is duplicative. The CFPA is needed precisely because agencies that had the power to protect consumers failed to use it. So those powers would be taken away from the agencies that failed to prevent the subprime crisis and given to the CFPA. Accordingly, the CFPA would not be duplicative.
As for Braswell's claim that the CFPA might increase costs or reduce the availability of credit, first, it's impossible to know what the CFPA will do, so it's impossible to know whether it will generate any costs or reduce the availability of credit. But second, personally, I hope it will adopt measures that will reduce the availability of the types of loans on which consumers are now defaulting in the millions. Third, does Braswell really believe that the CFPA's cost to the consumer will exceed the cost of the bailout or the cost in misery to consumers who have been foreclosed upon (and personally, I'd like to know whether he favored the bailout and whether his bank accepted bailout money)?
Finally, Braswell complains that members of Congress and their staffs aren't listening to him. Of course we don't know what he said, but if his argument was that the CFPA would be duplicative or Elizabeth Warren is under-educated, perhaps they shouldn't have listened to him. But the sad reality is that someone is listening to him, or someone like him--because if they weren't listening, we would already have a CFPA. (for more, see Baseline Scenario's view on Braswell's comments)
Update: ProPublica reports that in fact Carolina Bank did accept bailout money. (HT: Paul Kiel)
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