Big businesses present wish list for consumer finance regulation
On July 21, 2011, the Consumer Financial Protection Bureau is scheduled to officially begin living up to its mandate as the United States’ regulatory body for consumer finance companies. The impending change recently prompted business groups to send the Obama administration a “wish list” letter that expresses what they think the CFPB should do first, reports CNN Money. While focusing on bank regulation is considered a top priority, the notion of the CFPB proposing new financial reform before confirming a director is unpopular.
Confirm a CFPB director now, says big business
Harvard University professor and Obama administration adviser Elizabeth Warren originally conceived the idea for the Consumer Financial Protection Bureau, and she has been considered the most likely candidate to direct the bureau. However, Warren’s strong stance for the consumer and against the machinations of Wall Street make her an uncertain choice for confirmation, according to Sen. Christopher Dodd (D-Conn.), a co-founder of the Dodd-Frank Wall Street Reform Act. This has delayed the confirmation process, but it has not kept Warren from the difficult work of staffing the agency and meeting with bank executives, lobbyists, chambers of commerce, consumer groups and high-profile investors.
“They were wary, but polite, and quite surprised,” Warren said Monday of the meetings. “Some were sure I’d walk in with blood dripping from my fangs.”
What big business wants
In order to avoid burdensome or regulatory duplication, business groups are clamoring for the CFPB to approach banking and finance regulation with laser-like precision. Jess Sharp, director of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness, told CNN that Dodd-Frank is too ambiguous as it stands. The Consumer Financial Protection Bureau must do more.
“Targeted regulation to weed out bad actors is good for consumers, but there’s huge and ambiguous authority granted under Dodd-Frank,” Sharp said. “That can lead to huge regulatory burdens for Main Street businesses.”
Specifically, Dodd-Frank would empower the CFPB to supervise consumer finance companies that aren’t traditional banks, like short term loan companies. However, in the letter to the Obama administration, business groups frown upon such an idea.
“Deferring an expansion of supervision and examination requirements would allow businesses to devote resources to job creation rather than save them to cover what might well be unnecessary regulatory compliance costs,” the letter reads.
Praise for credit card companies
While the U.S. mortgage industry still needs repair, Warren praised the credit card industry for taking proactive measures to improve its relationship with consumers, writes Credit Card Studio. Further CFPB regulation may not be necessary.
“The data we have assembled indicates that much of the industry has gone further than the law requires in curbing repricing and over-limit fees,” Warren said. “Leaders in the industry deserve credit for moving in the right direction.”