Few realize that America is at a critical moment in the history of consumer protection. Last week Financial Services Committee Chairman Barney Frank led the House of Representatives to pass landmark legislation that would - for the first time - create a federal agency solely focused on protecting consumers from unsafe products and predatory practices in the financial marketplace.
The fate of the strong and independent Consumer Financial Protection Agency (CFPA) envisioned by the Obama Administration is now in the hands of the Senate, who must do even better. It's time to finally put an end to the charade that allowed financial products and services to be carved out of meaningful federal oversight during the last several decades.
The consumers, small businesses and entire communities struggling with unsustainable debt payments and imploding mortgages have never had to work harder to avoid predators as they search for reliable financial solutions. And it's certainly a fallacy that the promise of federal consumer protections in the financial marketplace comes too late.
Though the passage of the legislation by the House was a momentous first step, certain amendments offered in the fight, several of which congressman Frank had to accept to win passage, have weakened the bill and need to be removed if we are serious about effective reform.
These additions were pushed by a virtual "who's who" of predatory lenders and are a red flag for hopeful consumers. Industry by industry, they came forward to gain carve-out exemptions that defied defensible policy. Seeking to cloak their efforts by classifying in benign terms who they are, they managed to change the focus from what they are doing. It should be obvious that a predatory loan is a predatory loan, whether offered by a bank, an auto dealer, a payday lender or a tax preparer. The Senate must resist this false debate and focus on where consumers need protection, not where their predators seek refuge.
Under Mayor Bloomberg's leadership in New York City, where I am the Commissioner of the Department of Consumer Affairs, our residents are afforded some of the strongest consumer protections in the nation because of our ability to regulate auto dealers, pawnbrokers, debt collectors and employment agencies, among dozens of other industries. We've also had remarkable success partnering with local and regional financial institutions so we can go beyond quality financial education and counseling to offer genuinely safe financial products.
It can be done, but let's make sure we do it right.