New Consumer Financial Protections...Or Not?
SEATTLE - Although the new federal Consumer Financial Protection Bureau is set to open next week, it still has no director - and Republicans in Congress have vowed not to confirm anyone for the job unless the new agency's budget and powers are cut back.
The agency's would-be director, Elizabeth Warren, was on the congressional hot seat again Thursday, telling a House committee that the new bureau will simplify credit terms and help consumers decide what they can afford.
That kind of assistance would also help prevent future systemwide financial meltdowns, says Melissa Huelsman, a Seattle attorney.
"Absolutely. This is one of the problems: The protections that people thought were there were not really there, or they were gotten around, or they were much weaker than they thought. The systems that were in place at that time were clearly inadequate to prevent what was happening, from happening."
Congressional Republicans are concerned that a pro-consumer agency could also be anti-business, making it tougher for banks and mortgage companies to profit and help grow the economy. They're pushing for a five-member commission to run the new agency, instead of one director.
Some have questioned the need for another federal agency. But Huelsman, whose practice includes predatory-lending cases, says the new bureau would fill a big gap that isn't being addressed.
"It is abundantly clear that the federal regulators, as they exist now, had absolutely no interest in protecting consumers. Even now, you have the Office of Comptroller of the Currency and the Office of Thrift Supervision, being the front people for the banks. What they have done, even after the financial crisis, is tantamount to nothing."
The feds, says Huelsman, also could learn from the new Foreclosure Fairness Act, a Washington state law that goes into effect July 22. It requires that lenders offer mortgage-holders in default a face-to-face meeting to discuss their options.