Secretary of Agriculture Tom Vilsack, Iowa Attorney General Tom Miller and leaders of AARP today urged Congress not to strip state enforcement from President Obama's proposed Consumer Financial Protection Agency.
The Administration's proposal includes a strong role for the states to aid in enforcement to protect consumers. But members of Congress considering the bill are under heavy lobbying pressure to "preempt" or limit state enforcement.
"This is the most important consumer protection legislative issue of our day," noted Miller. "Preserving a proper role for the states is crucial if consumers are going to be protected from a repeat of the banking and mortgage abuse issues we've seen in recent years." Miller is one of 24 state attorneys general who sent a letter to chairmen of the House and Senate committees on banking and financial service back in August. The attorneys general support creation of the Consumer Financial Protection Agency because the legislation preserves the states' ability to protect consumers.
"It is a terrific proposal," said Miller. "But there is a big fight and it is being led by the big national banks – many of which had to be bailed out by taxpayers because of their involvement in the national mortgage meltdown. And they have convinced smaller banks to join in even though the smaller banks, like those in Iowa, will be able to comply fairly readily with whatever regulations the agency develops. "
This week Congress starts action on the program, beginning with "mark-up" in the House Financial Services Committee. "Amendments to weaken the role of the states risk allowing a repeat of our recent disaster where the federal government pushed the states aside, and then failed to act in the public interest itself," declared Miller
USDA and AARP weigh in
Miller made his comments at a news briefing on Tuesday. Joining him were US Secretary of Agriculture Tom Vilsack and Bruce Koeppl, AARP state director in Iowa.
"You may wonder why the secretary of agriculture is talking about this particular issue," noted Vilsack. "It's because we will make 130,000 home loans this year, many of them guaranteed by financial institutions throughout the country.
"We want our customers, the people who live in rural America, to be protected, to understand precisely what the rules of the game are and precisely what the rules of their relationship with the bank is. We want to protect them against issues and programs that will do them harm. My hope is that the members of the House Financial Services Committee will vote in favor of moving this forward."
Creating an agency to protect consumers' financial needs is a step in the right direction, noted Koeppl. "But at the same time, it would be wrong to diminish strong, state consumer protection in the process, or do anything that would actually hurt enforcement of consumer protections," he stated.
"A federal floor of consumer protection is necessary, but the experience of recent years has proven that states must be able to act to respond to local problems, and that balanced state laws make the playing field safer for honest, efficient businesses as well as consumers and all their neighbors.
"We stand today for a new approach for consumers, especially for older consumers with depleted savings, who the current system has failed to protect."