from an expert in the field:
Ira Rheingold is executive director of the National Association
of Consumer Advocates (
OCTOBER DEBATE RESULTS:
Should we rely more
on wind energy?
the extent oF our current economic crisis could have been dramatically lessened, and we all would have more money in our retirement accounts and more value in our homes, and more of us would still
have jobs, if only regulators who are supposed to be protecting consumers had actually done their jobs.
For years, consumer advocates warned the Federal reserve Board
and the other federal banking regulators that predatory subprime mort-
gage lending would lead to a foreclosure epidemic, yet because the Federal reserve and the
other federal regulators were interested in protecting bank profits and bank assets, they either
did nothing or actively made things worse. For instance, when state and local governments
attempted to protect the public from the banking industry’s dangerous practices by passing
anti-predatory-lending laws that would have stopped the worst mortgage practices, the office
of the comptroller of the currency and the office of thrift supervision—both federal bank-
ing regulators—declared their allegiance to the banks they were supposed to regulate (and
their hostility to american consumers) by using their powers to announce that none of these
laws would apply to any of the banks they regulated.
We need a robust, independent federal agency whose sole mission is to look out for you
and me. We need an agency that will protect all of us from unfair and usurious credit-card
practices, abusive payday loans, excessive overdraft loan fees for small debits, confusing fine
print and predatory mortgages that have devastated our neighbors and our communities. We
need an agency that creates rules that establish basic standards for financial products and
behavior benchmarks for the financial institutions that offer them. and we need an agency
that helps increase competition in the marketplace by making bad behavior unprofitable and
promoting innovative practices that help consumers choose fair and economically healthy
restoring consumer protection must be the cornerstone of any effort to properly rebuild
our broken banking system and to once again get our economy to work for all of us. a power-
ful consumer Financial Protection agency, not controlled by the banks, but designed to put
public protection first and foremost, is an essential step in making that actually happen. C
Percentage reflects votes
received by October 6, 2009.
SEPTEMBER DEBATE RESULTS:
Is legislation the right way
to deal with cyberbullies?
YES: 46% NO: 54%
Percentage reflects votes received by
September 30, 2009. Results may reflect
Debate being picked up by blogs.
from an expert in the field:
Chris Stinebert is president and chief executive officer of
the American Financial Services Association in Washington, D.C.
congress, consumers and industry share the goal of effective
consumer protections for financial products and services. Where we
disagree is how to get there.
despite its name, the proposed consumer Financial Protection
agency (cFPa) is not the best way to protect consumers, especially
those who own small businesses. the agency’s wide scope would give it authority over
many financial entities that had little or no involvement in the events that led to the current
economic crisis. auto dealers, accountants and retailers offering prepaid cards could be
among those swept into a web of scrutiny and reporting requirements that will do little to
protect consumers and much to increase their costs.
Foremost among the cFPa’s tasks would be requiring companies to offer “plain vanilla”
products and services. companies offering nontraditional choices that could be deemed unfair
or abusive may be subject to lawsuits and other punitive action, discouraging innovation.
some borrowers may be unable to get credit because they won’t qualify for “plain
vanilla” financing. subprime borrowers will be hit especially hard.
Funding for this massive agency will come from fees assessed on those it regulates—
fees that undoubtedly will be passed on to consumers. in essence, small-business owners
will get hit twice, as borrowing money will become more difficult and expensive for them
and their customers. costco shoppers could feel the effects of the agency every time they
use a credit or debit card to pay for their purchases.
if the cFPa becomes a reality, the government will have more say in the selection of
financial products than the people who use them, and consumers will face increased costs,
less choice and reduced access to credit. But we don’t have to go that route.
instead, we can increase consumer protection in the financial services marketplace with
clear, easy-to-understand disclosures, improved financial education, adjustments to the cur-
rent regulatory structure and better use of the expertise and experience of existing agencies.
this approach is likely to be far more effective, while leaving choice with consumers. C
NOVEMBER 2009 The Costco Connection 19
Opinions expressed are those of the
individuals or organizations represented and
are presented to foster discussion. Costco
and The;Costco;Connection take no position
on any Debate topic.