Consumers need a protection agency
Look for the battle over reform of the financial industry reform just after the Thanksgiving holiday.
That’s when the debate is expected to begin in the Senate over the massive proposal from Sen. Christopher Dodd, D-Conn.
The House Financial Services Committee has been dealing with the issues one by one, including its bill approved Oct. 22 that would create the Consumer Financial Protection Agency.
That's the part I'm watching closely.
There's tons of opposition, from the financial services industry.
"Just a year ago three brought the global economy to the verge of collapse. They're being remarkably successful in eating away at the reform proposals that are put on the table," said Barbara Roper, the Consumer Federation of America's investor expert.
"It's a tough battle, a lot tougher than it should be under the circumstances," she said.
Elizabeth Warren, the Harvard law professor who has been appointed by Congress to oversee the $700 billion in bailout money, calls the agency a potential game-changer.
She spoke last week to a small group of reporters who cover personal finance and the economy.
Warren pointed out that the Consumer Financial Protection Agency will not act like other regulators, who tell industry not to do this or to do that. Instead, its primary function will be to make financial services products more comprehensible to consumers. To make it possible for buyers to do such things as compare costs across companies.
"This agency has game-changing capacity. It will give consumers the power to make markets work effectively and to manage their own household budgets more powerfully," she said.
The new agency would gather up consumer protection authority from the Federal Reserve and other banking regulators and consolidate it. It would be able to set guidelines for credit cards and mortgages, and require disclosure of costs, benefits and risks.
The concept is good, but not perfect. It exempts auto dealers, for example, so you’d be on your own with their loans. And it won’t address insurance products, which I think plenty of people are going to buying as the Baby Boomers reach retirement.
Well, it’s only beginning. Let’s see what happens in the Senate.
Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.
Comments
That's why lobbyists exist.
Legal bribery - and it is nothing less than bribery.
Posted by: Mark Wolfibger | November 16, 2009 2:27 PM
Consumers need to start doing their homework and be more responsible with their money. We don't need more government...
I am doing my part. I started contractorwatchdog.com and I donate free time speaking at the Home Show to educate the public on various topics.
What is the media doing to help?
The only thing I see in the news is problems, not solutions.
Posted by: Steve Gonzalez | November 18, 2009 5:03 PM
Consumers already have plenty of access to information for comparing loans. What we need is to break up the mega-banks that caused our economy to collapse. When banks are too big to fail, we all get screwed. Dodd seems to be in the pocket of big banks, and this off base attempt at reform is a joke.
Posted by: Ralph | November 19, 2009 10:42 AM