GOP: Don’t create Consumer Financial Protection Agency (CFPA)

January 4, 2010 | By | 5 Replies More

The GOP is opposed to creation of the Consumer Financial Protection Agency (CFPA). Sen. Robert Bennett of Utah, a senior Republican on the banking committee is speaking his mind:

“That doesn’t mean we’re opposed to consumer protection, but a single agency whose sole purpose is consumer protection would be really bad news,” Bennett said. “I’ve served in the executive branch. I know what happens when the culture around a single mission takes over an agency. Republicans say that consumer protection has to be tied to regulation so the regulator who’s involved with regulation and consumer protection doesn’t go overboard in one direction or the other.”

Apparently the GOP doesn’t like the idea of requiring sellers and banks to provide full disclosure regarding products communicated in plain English. The GOP apparently likes those 29-page credit card contracts that no one can understand. It apparently likes the ideas of arbitration forced on consumers pre-dispute and 500% payday loans. Apparently the GOP approves of hidden fees that drive people into foreclosure and then bankruptcy. The GOP apparently tolerates the status quo because, in the absence of a strong federal agency that speaks on behalf of regular folks, we’re going to get a lot more of the same.


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Category: Politics

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (5)

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  1. jmb27 says:

    Predatory Lending is a major contributor to the economic turmoil we are currently experiencing.

    Here is an example of what I am talking about:

    Scott Veerkamp / Predatory Lending (Franklin Township School Board Member.)

    Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices:

    "Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called Yield Spread Premiums, turned home mortgages into a SCAM."

    The Center for Responsible Lending says YSP "steals equity from struggling families."

    1. Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. 2. This is an average of $5,000 per loan. 3. The median value of the properties was $135,000. 4. Clearly, this type of lending represents a major ripoff for consumers.

    • Erich Vieth says:

      JMB27: I agree with you entirely. Charging Yield Spread Premiums is another method that many lenders and brokers use to steal money from borrowers. Just think: the broker (or lender) knows that you are looking for the lowest interest rate and that you qualify for a loan at 5% but doesn't tell you about that fact. Instead, he tells you that you qualify for a loan at 5.3%, never mentioning the lower priced loan. The customer signs up for the 5.3% loan. The broker receives a bonus from the bank for putting the customer into a higher priced loan than the customer could have received had the broker been honest. Guess who pays that bonus? The customer, through higher monthly premiums than they should have had. It can amount to thousands of dollars of unnecessarily high payments over the life of a loan.

      Stealing. That's exactly what it is, especially when you get shafted by a broker who is sitting there pretending to be your fiduciary. Another technique that should be abolished immediately. But it won't be abolished because financial institutions have bought and paid for our "representatives." For more on this disreputable practice, see this article from the Center for Responsible Lending.

  2. Erich Vieth says:

    Exhibit A that the voters aren't in charge of Congress:

    "The House Financial Services Committee approved a controversial amendment, opposed by Chairman Barney Frank, to exempt auto financing from independent dealers from the oversight of the Consumer Financial Protection Agency. The vote was 47-21, with a large number of Democrats joining with Republicans. I’ll have the full committee breakdowns for you when I get them. The panel did approve the creation of the CFPA by a 39-29 count, ignoring the massive lobbying campaign trying to kill it outright."

    Here's the second largest purchase most people make, and Congress overwhelmingly votes that there no need for a consumer advocate agency to scrutinize these loan contracts to make sure that they are readable.

    Related post:

  3. NIklaus Pfirsig says: has a transcript of Thomas Frank by Bill Moyers where Frank describes the anti-government mindset of the conservative philosophy Here's the transcript and here's an excerpt:

    And they look at someone like Barack Obama and it makes them seethe. Because that's, you know, that's what he's trying to do. What conservatism in this country is about is government failure. Conservatives talk about government failure all the time, constantly. And conservatives, when they're in power deliver government failure.

  4. Erich Vieth says:

    "If the financial reform bill doesn't establish an effective and independent consumer protection agency, Congress would be better off passing nothing at all, Elizabeth Warren warned on Friday."

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