Legislation that creates a federal Consumer Financial Protection Agency (CFPA) is critical to shielding consumers from financial industry abuse, four state attorneys general said in a press conference call Tuesday.
Connecticut's Richard Blumenthal, Iowa's Tim Miller, Illinois' Lisa Madigan and Ohio's Richard Cordray renewed their calls for such legislation, which appears stalled in the Senate. Last Friday, Senate Banking Committee Chair Chris Dodd, D-Conn., released a statement vowing to move forward on financial reforms. He said he intends to present legislation to the committee later this month. Blumenthal was the first attorney general to testify before the Senate Banking Committee in favor of a proposed CFPA last year.
‘Big banks and Wall Street investment firms that torpedoed our economy now want to tank a proposed Consumer Financial Protection Agency – spending millions on lobbyists to fight the proposal," Blumenthal said Tuesday. "An alphabet soup of existing federal agencies aim to secure the safety and soundness of financial institutions – and enhance their profitability.
"They have been complacent and complicit in failing to protect consumers against profiteering," he added, saying it is now "painfully clear" the financial meltdown was "facilitated and enabled by a massive federal regulatory failure."
Noting the Office of the Comptroller of the Currency pursued just 11 enforcement actions in the last nine years, Illinois' Madigan said attorneys general and state banking regulators were the only ones not asleep at the wheel. The CFPA must be a stand-alone agency, she said.
"If the banks can't kill the CFPA, they've suggested housing it with one of the existing federal regulators, effectively doing away with the president's vision of an independent agency," Madigan said. "And I can tell you, that is a recipe for another disaster, because federal banking regulators have a dismal track record when it comes to protecting consumers and, quite frankly, our economy."
SOURCES: Offices of Connecticut Attorney General Richard Blumenthal and Illinois Attorney General Lisa Madigan