Why We Need An Independent Consumer Financial Protection Agency Now

With financial regulatory reform pending, Congress has the opportunity to rebuild the structures that will prevent another crisis and ensure broad-based economic growth.
March 1, 2010
By Tamara Draut & Heather C. McGhee

The time has come for the creation of a Consumer Financial Protection Agency. For thirty years, Washington has been captive to a governing philosophy that eschewed regulation in almost any form, arguing that the hand of government was best kept behind its back. But the era of deregulated finance has shown that without public structures to ensure accountability and fairness, the system can not sustain itself. The result of this failed experiment in deregulation has been a crisis costing Americans $11 trillion in family wealth, $14 trillion in taxpayer bailouts and over 8 million jobs.

What a Consumer Financial Protection Agency Will-and Won’t-Do

Q: How would a new “independent” agency work?
Q: Doesn’t the CFPA add to the regulatory burden facing banks?
Q: Doesn’t the CFPA create a new bureaucracy in an already crowded financial oversight field?
Q: Shouldn’t the CFPA’s rules preempt state consumer protection laws?
Q: Won’t the CFPA stifle innovation and consumer choice?
Q: Shouldn’t the CFPA be an office within a bank regulator or a council of existing regulators?

Read the full article for the answers to these common criticisms against creating a consumer financial protection agency.