Consumer group to lead fight for financial product safety agency

The Consumer Federation of America will lead the charge next year in pushing to create an agency similar to the Consumer Product Safety Commission that would regulate financial services products.

Elizabeth Warren, a law professor at Harvard University, announced Friday the federation will take the lead with its allies in pushing her idea for a Financial Product Safety Commission that would regulate the offerings of such items as home mortgages, credit cards and car loans -- which are overseen by a myriad of state and federal laws and agencies.

"I believe we are in the regulatory moment," Warren said during a CFA conference. "We have a fractured regulatory structure."

The push comes as Warren's star is rising in Washington: Senate Majority Leader Harry Reid, D-Nev., appointed her to the five-member board overseeing the $700 billion Troubled Assets Relief Program, where she was elected chairwoman by its members. In addition, she has been one of the leading critics of the credit card industry, providing intellectual heft to Democratic lawmakers in their drive to further regulate the multitrillion-dollar business. The House passed a measure this year to restrict many card practices that activists called unfair and deceptive.

Senate Banking Chairman Christopher Dodd, D-Conn., has vowed to move similar legislation next year.

Consumer groups will face an array of opponents in their quest as banks, insurance carriers, hedge funds and other firms are lining up to battle over an overhaul of the nation's financial regulatory structure in the aftermath of the banking crisis and subsequent worldwide credit crunch. But it picked up support this year when Senate Majority Whip Dick Durbin, D-Ill., introduced legislation that would create such an agency.

Warren said such a commission would have a more holistic effect than trying to battle businesses legislatively on each specific issue. "You have to fight them one stick at a time," she said. "I think it is too hard." A major effort will to get a narrative across that creation of an agency is predominantly about the issue of safety -- protecting families, just like the CPSC does in keeping lead out of toys. "We are at a critical moment of deciding, what is that message?" she said.

She said opponents will try to argue against the proposal on two basic themes: that it will impose price controls and that such an agency will eventually fall captive to the industries that it regulates.

But she disputed such criticisms, noting that such an agency would be given a broad set of principles to protect consumers rather than rigid rules, so it will have flexibility to respond to changing marketplace conditions rather than using price caps. In addition, Warren mentioned the example of the EPA as a successful agency that is able to regulate an array of industries and be able to carry out its mission to protect the environment. "I wouldn't describe the EPA under regulatory capture," she said.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.


When you download a report, your information may be shared with the underwriters of that document.