How not to protect consumers

Critics of the Consumer Financial Protection Agency should take a harder look at what we've got now

Published August 21, 2009 10:45AM (EDT)

The Baseline Scenario tells us that Adam Levitin's white paper examining the pros and cons of the Obama administration's proposed Consumer Financial Protection Agency is a must-read, particularly if you are looking for arguments that slap down criticism of the scheme.

HTWW has linked to Levitin's work on multiple occasions, and we've even e-mailed back and forth a few times. So I wasted little time absorbing the new paper, written under the auspices of the Pew Foundation.

Two paragraphs stood out.

On the federal level, consumer protection in financial services is divided among a number of agencies ... Some of these agencies have the ability to promulgate regulations, some also exercise supervisory authority over financial institutions, and some may only enforce existing regulations. Sometimes authority is over a class of institutions, and sometimes it is over a particular type of product. Thus, responsibility for consumer protection is split among the OCC (national banks, federally-chartered branches, agencies of foreign banks), OTS (federal thrifts and thrift holding companies), NCUA (federal credit unions and federally-insured state credit unions), Federal Reserve (bank holding companies, state-chartered member banks, nonblank subsidiaries of bank holding companies, Edge and agreement corporations, branches and agencies of foreign banking organizations operating in the United States and their parent banks and some aspects of checks and electronic payment systems), FDIC (state-charted insured banks and insured branches of foreign banks), FHFA (the mortgage industry in general through Federal Home Loan Banks, Fannie Mae and Freddie Mac), HUD (real estate settlement procedures and FHA-insured mortgage loans), VA (VA-guaranteed mortgage loans), IRS (tax preparers), FTC (non-banks, including debt collectors), and Department of Justice (residual anti-fraud authority).

Pretty crazy, huh? But despite this proliferation of regulators, or maybe because of it...

There is no federal statistic on the total volume of credit card debt, on checking account overdrafts, on payday loans, on refund anticipation loans, or auto title loans, much less their terms and performance. For mortgages, there are no nationwide governmental measures of terms, performance, or foreclosures. At best, particular agencies collect data on some aspect of their regulatees' business, but there is no coordination of the data to provide an economy-wide picture.


By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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