The first words of Sen. Charles Schmuer’s recent amendment to the Restoring American Financial Stability Act of 2010 (SB3217) are:
“To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, and to protect consumers from abusive financial services practices.â€
Since 1985, Schumer has promoted this concept of consumer membership associations to oversee financial institutions. In light of the events of the recent past, isn’t it time that consumers be allowed to help watch out for themselves?
The nation’s financial industries have a significant effect on the daily lives of the nation’s consumers. We need a strong regulatory agency to oversee financial services products. But we also need an independent consumer voice to monitor the actions of financial corporations. A Financial Consumers’ Association is the answer. It would be supported by membership dues, and the members would elect a board of directors that could hire researchers, organizers, accountants and lawyers.
u u u
Why do we need this is if Congress creates a Consumer Financial Protection Agency (CFPA), which would play an important governmental role in protecting consumers? A Financial Consumers’ Association would enhance, not duplicate, the work of the CFPA. It would monitor government regulators, and provide an independent and complementary voice for consumers. The combined efforts of both the CFPA and a Financial Consumers’ Association will help restore the balance of power between financial services corporations and consumers.
A member-driven Financial Consumers’ Association could:
1. Represent consumer interests before regulatory agencies, legislative bodies and the courts, and in negotiations with financial service providers;
2. Advocate policies before regulatory bodies that will ensure reasonable access to credit for all consumers;
3. Evaluate the performance of mortgage lenders and monitor the availability of financial services to less affluent and minority borrowers; and
4. Provide policymakers, consumers, workers, shareholders, taxpayers and the news media with timely information on the effects of financial industry and government initiatives.
To make a Financial Consumers’ Association work, financial institutions would be required to include in their billing and account statement envelopes and electronic communications with customers periodic notices informing customers of the existence and functions of the Financial Consumers’ Association and the procedure for becoming a member.
u u u
As Congress works toward re-regulating the financial services industry it must finally create the opportunity for consumers to have an organization that is able to withstand political pressures and the enormous lobbying influence of the financial industry.
Consumer groups from Consumer Union, National Consumer Law Center, Public Citizen, Consumer Federation of America, National Association of Consumer Advocates and USPIRG support this amendment.
So does Sen. Chris Dodd. But he needs public support this week to make it happen over the intense opposition of the financial industry. Tell Sen. Dodd that you support this measure.
Call his office at 202-224-2823 in Washington, D.C., or 860-258-6940 in Hartford or use his Web form at dodd.senate.gov. He’s trying to do something right for a change. Let’s support it.
To read more about the Financial Consumers’ Association, go to csrl.org/?p=246.
Charlene LaVoie is the community lawyer in Winsted. Her office is funded by the Shafeek Nader Trust for the Community Interest.
