July 16, 2009
Proposed Financial Protection Agency Will Cost Consumers, Says AFSA
WASHINGTON — At yesterday's hearing on financial regulatory reform, Chris Stinebert, president and CEO of the American Financial Services Association (AFSA), told the House Committee on Financial Service that the proposal to create a consumer financial protection agency would impose a new tax on consumers at a time when they are least able to afford it.
Under the proposal, the Consumer Financial Protection Agency
(CFPA) would provide consumer protection oversight for all financial products
and services. The agency would be funded by assessments on financial services
providers that undoubtedly will be passed on to consumers, said
Stinebert. The funding needs could be “staggering” given the proposed
agency’s vast scope, he added.
“Congress should think carefully about setting up a new
government agency that would cost taxpayers more money at a time when they are
already struggling to stay afloat financially,” Stinebert said.
Instead, lawmakers should allow time to evaluate the effects
of other government initiatives, he said, as well as implement national
preemptive standards that make current and future consumer protection rules
apply to all financial services providers. AFSA’s other recommendations
include pursuing a regulatory structure that houses prudential and consumer
protection oversight within a single regulator and providing additional
resources that permit existing regulators to step up enforcement of consumer
protection laws.
Stinebert also advocated preserving the charter for
industrial loan banks, “which provide a safe, sound and appropriate means to
deliver financial services to the public and have not been part of the
problem.”
AFSA is concerned about the proposed agency’s effects on
innovation, said Stinebert. “With its vast, unfettered authority, the proposed
regulator has the potential to roll back the clock 30 years, when consumers had
only standard, ‘plain vanilla’ borrowing options,” he stated.