In the aftermath of an economic crisis that caused over 8 million Americans to lose their jobs and wiped out trillions of dollars in family savings and small business assets, the American people deserve reform that will hold Wall Street accountable and provide strong consumer protections. The Restoring American Financial Stability Act would establish a new “cop on the beat” to protect consumers. The independent Consumer Financial Protection Bureau (Bureau) will provide American consumers with the information they need to empower them to make smart financial choices for themselves. The Bureau also will help guard against hidden terms and fine print that trap American families in unfair, deceptive and abusive financial products.
American consumers already have protections against faulty appliances, contaminated food, and dangerous toys. The Consumer Financial Protection Bureau will establish a watchdog to oversee consumer financial products, giving Americans confidence that there is a system in place that works for them – not just big banks on Wall Street.
The Bureau would have an independent director appointed by the President and confirmed by the Senate, and a dedicated budget paid by the Federal Reserve Board. The Bureau would also have:
· Independent Rule Writing Authority: The Bureau would have the ability to write rules for consumer protections governing all entities – banks and non-banks – offering consumer financial services or products.
· Examination and Enforcement: The Bureau would have the authority to examine and enforce regulations for banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators) and large non-bank financial companies, such as large payday lenders, debt collectors, and consumer reporting agencies. Banks and credit unions with assets of $10 billion or less would be examined by the appropriate regulator.
· Rapid Response Mechanisms: With this Bureau on the lookout for bad deals and schemes, consumers would not have to wait for Congress to pass a new law to be protected from bad business practices.
· Educational Programs: A new Office of Financial Literacy is also created within the Bureau.
· Consumer Hotline: For the first time, consumers would have a single toll-free number to report problems with consumer financial products and services.
· Centralized Accountability: With many agencies sharing responsibility, it is difficult to know who is responsible for what, making it easy for emerging problems that have not historically fallen under anyone’s purview to fall through the cracks. The bill would streamline and strengthen consumer protection responsibilities currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development, and Federal Trade Commission.
· Coordination with Bank Regulators: The Bureau would coordinate with other regulators when examining financial institutions, in order to prevent undue regulatory burden. The Bureau would also consult with regulators before a rule is issued, and regulators could appeal regulations they believe would put the safety and soundness of the banking system or the stability of the financial system at risk.
· Focused on Financial Products and Services: The Bureau will not cover dentists, orthodontists, main street retailers, or others simply because they let customers pay their bills over time.