July 15, 2009
Determined to curtail the financial industry’s stranglehold on American consumers, Sen. Dick Durbin began pressing months ago for the creation of an independent agency that would protect consumers from predatory practices. Reining in the banks’ extraordinary political power on Capitol Hill hasn’t been easy. In what seemed like a sign of progress, legislation to create a Consumer Financial Protection Agency (CFPA) surfaced in the House last week. But consumer watchdog groups such as Illinois’ own Woodstock Institute (WI) aren’t ready to cheer yet.
The reason? Since the proposal was initially floated by the White House, a key safeguard has been stripped from Massachusetts Democratic Rep. Barney Frank’s bill (HR 3126). The provision in question would have left the modernization of the Community Reinvestment Act (CRA) in the hands of the newly-created watchdog agency — rather than the financial services industry. Letting Wall Street-interests control the rewrite, WI argues, would weaken the expansion of loans to borrowers and communities of color. And they say allowing federal banking regulators to continue to enforce the CRA would have the equally negative effect of stifling development in impoverished communities.
In response, WI has put out a call to action, asking grassroots organizations to mobilize today to alert members of the Financial Services Committee (including Illinois Democratic Reps. Luis Gutierrez, Melissa Bean, and Bill Foster) that they need to reinsert this key provision back into the bill. From their blog:
[T]his new agency must be endowed with broad authority [to] protect consumers and communities from the financial industry’s worst practices. Regrettably, this crucial power was omitted in H.R.3126 now being considered by the House. The authority to implement and modernize CRA should fall to the CFPA … Policymakers need to hear from constituents that this piece of the consumer protection plan is critical to advancing economic security and community prosperity in our state.
The banking lobbyists are already preparing a counter-campaign to defeat the bill, which will ultimately cost them billions by outlawing hidden fees and other abusive practices. As WI notes, it’s going to take some early and aggressive campaigning by community-based organizations to take on such entrenched interests.