Despite the opposition from the financial industry, there is hope indeed for consumer protection in Congress. It has been proposed that a federal agency be set up with the aim to protect all consumers from financial practices that have largely contributed to the global economic meltdown we are experiencing today. More importantly, federal officials say that this proposed federal agency should be able to obtain approval by the end of this year and should be up and running by the middle of 2011.
The idea of the proposed Consumer Financial Protection Agency (CFPA) came from President Barack Obama himself, which was made public June of this year. As proposed, the agency would have more power and authority in ensuring that credit and payment products would not prey on consumers via deceptively hidden features. The only result of such features would be the locking of consumers into loans they cannot afford to pay.
The U.S. Treasury provided the Congress an outline of its recommendations on how the agency should operate early this month. Treasury officials themselves feel a lot confident that approval of the agency would be obtained before the holiday season sets in, in spite of the changes that the legislation would inevitably go through.
Neil Wolin, the Deputy Secretary of the U.S. Treasury assures that his whole department is working hand in hand with both the Senate Banking Committee and the House Finance Services Committee towards achieving comprehensive financial regulatory reform legislation by the end of this year. Moreover, Wolin shares how important it is to look into repairing what consumer protection failed to achieve. What's important is for consumers never to be subject to subordination, where they are sold products that they cannot afford to pay for, or even products that they don't really understand the purpose for.
However, bankers and other enterprises in the financial sector have something else to say. Odysseas Papadimitriou, the Chief Executive of CardHub.com, is saying that despite the fact that he is all for consumer advocacy in the credit card arena, the CFPA still would not work as intended because of its faulty basis, which is that consumer protection and the overall soundness and health of financial institutions are separate entities.
Chris Dodd, the Senate Banking chairman, is calling out for Americans to support the approval of the proposed agency. At present, consumer advocates are organizing rallies for the coming House committee hearings. In spite of the challenges ahead, Neil Wolin remains optimistic that the proposed CFPA will still be able to obtain the needed approval. As Wolin aptly states, it is just a matter of ensuring that the prescription matches the diagnosis.
