(Tucson, Ariz. – Oct. 14, 2009) Attorney General Terry Goddard today voiced strong support for President Obama’s proposal to consolidate existing federal consumer protection authorities into one federal agency. The proposed Consumer Financial Protection Agency would oversee the entire consumer financial market, strengthen federal consumer protections for families and individual investors and enforce the rules consistently.
Goddard expressed his support for the proposal at a news conference today in Tucson. He was joined by Pima County Board of Supervisors Chairman Richard Elias, Primavera Foundation Board Treasurer Rebecca McReynolds and Southwest Center for Economic Integrity Deputy Director Kelly Griffith. The Pima Council on Aging has also expressed support for the proposal.
“Abusive lending practices and regulatory loopholes are at the heart of the mortgage crisis that has devastated Arizona families and our State’s economy,” Goddard said. “I am aggressively prosecuting those who defraud Arizonans, but state action alone is not enough. Federal policy makers must reform the system to be more efficient and operate in the best interests of consumers.”
The U.S. House of Representatives Committee on Financial Services is meeting today to discuss H.R. 3126, the Consumer Financial Protection Agency Act of 2009. The proposed agency would ensure consumers are provided information that is simple, transparent and accurate and would:
- Create a single agency with the authority and mission to streamline and simplify mortgage disclosures so that families can understand them.
- Enforce the new Credit Card Bill of Rights and keep disclosure requirements up to date if credit card companies try to work around them.
- Raise the standards for brokers and investment professionals so that they have a fiduciary duty to act in the interests of investors when giving advice.
- Require mutual funds to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
- Increase protections for those who uncover and report financial frauds.
Goddard, Elias and Southern Arizona community leaders discussed how the current system of regulation failed to protect responsible consumers in recent years. Competition from unregulated players led regulators to permit inappropriate mortgages and abusive credit cards. Federal regulators let this happen because their primary mission is to ask, “What’s the effect on the financial firm?” instead of “What’s the effect on consumers?”
In addition, Goddard noted how today’s complex patchwork of regulations has put locally owned Arizona banks at a disadvantage. Community banks must compete against mortgage brokers and mortgage finance companies, which, unlike banks, are not subject to federal oversight.
In recent years, non-bank firms won market share by lowering lending standards and offering irresponsible – and often deceptive – loans. The Consumer Financial Protection Agency would put an end to community banks’ competitive disadvantage by extending the reach of federal oversight to all financial firms, banks and non-banks alike.
For more information, please contact Anne Hilby at (602) 542-8019.