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Ellison calls for consumer finance regulator
He wants a single agency that will look out for people applying for credit or taking out a loan.
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During the congressional recess, Rep. Keith Ellison, D-Minn., is talking about something besides health care reform. On Thursday, Ellison spoke out on the need for a single regulatory agency to protect consumers taking out a mortgage, applying for a credit card, or resorting to a payday loan.
"We need a consumer financial products agency that can protect consumers from tricky financial documents and will allow consumers to make real choices based on clear disclosure," Ellison said during a conference call promoting the bill he co-sponsored. The agency is part of the sweeping overhauls of the financial system that the White House is proposing in the wake of the Wall Street crisis that spread to Main Street.
Most players in the financial industry oppose the idea of a new consumer finance regulator. "It seems like it's just going to be another layer of regulation and bureaucracy on top of our banks," said Steve Johnson, director of government relations for the Minnesota Bankers Association.
Others worry it could increase costs for consumers and make it harder to borrow money.
Ellison argues that banks that have been playing by the rules should be happy to see a law that requires anyone selling consumer financial products to meet the same standards. "Their nonbank lender competitors as well as payday lenders and subprime credit card issuers now have to play by the same rules as they play by," he said. "The only people it won't help is people who want to issue tricky predatory loans. And I don't think they deserve our help. They put us in the most precarious financial situation we've seen since the '30s."
Heather Booth, director of Americans for Financial Reform, a coalition of about 200 consumer, civil rights and labor organizations pushing for consumer-friendly financial regulation, believes the current economic situation was worsened, and maybe even caused, by regulatory failures.
Fewer people would have lost their homes, jobs and retirement savings "if only the regulators who were supposed to be protecting consumers had actually done their jobs," she said.
The Consumer Financial Protection Agency would create a single point of accountability for financial products, unlike today's patchwork of government and independent regulatory agencies. "This agency will have the power to set standards so that companies compete by offering innovative products that consumers actually want -- and actually understand," President Obama announced in June.
The House Financial Services Committee is expected to vote on the bill later this month.
Ellison will hold a town hall meeting Oct. 24 in his district on the topic.
Kara McGuire • 612-673-7293
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