March 2, 2010
The Honorable Senator Christopher Dodd
Committee on Banking, Housing and Urban Affairs
448 Russell Building
Washington, DC 20510
Dear Senator Dodd:
On January 19, 2010, I wrote to you about news reports that you were considering dropping the proposal to create an independent and free-standing Consumer Financial Protection Agency (CFPA). In the last few days news reports indicate that you are advancing the notion that the CFPA should be housed within the Federal Reserve. The Federal Reserve is always a step short and a day late in protecting consumers. To house the CFPA within the Federal Reserve is to doom it to failure.
As I said in that letter,
Making this kind of deal with the Republicans and more conservative members of your own party will signal to consumers across the land that you, as chair of the Committee on Banking, Housing and Urban Affairs, have lost touch with Main-Street interests. It will show that the leaders of the Democratic Party care more about the high-rolling gamblers on Wall Street and the fat-cat bankers than the consumers, workers, taxpayers, and small investors who have been left with the costs of the financial meltdown caused by executives’ greed, speculation and crimes.
When you announced that you were not seeking re-election, many in the consumer movement thought that you would be free to push for meaningful financial re-regulation because you wouldn’t have to worry about re-election fundraising. Instead it looks like you are mistakenly thinking that a financial re-regulation bill, no matter how lacking, is better than no bill, and that you need to deliver such a bill for President Obama.
In fact, abandoning consumers on real financial re-regulation is likely to be more costly to President Obama and the Democratic Party than standing up to the banking and financial interests that have so damaged our economy.
The Consumer Financial Protection Agency should be independent with strong leadership, not part of some other existing bank-indentured financial regulatory agency. Consumers need an independent agency that will serve their interests without being captured by the financial wheelers and dealers who put gouging for short-term profit before the legitimate interests of consumers. These wheelers and dealers have been expert in capturing the so-called bank regulators in Washington, DC. You have previously pointed out their “abysmal failure.”
Senator Dodd, it is time for you to be a transforming leader and champion for many millions of consumers. You know how to articulate their case and focus public outrage on the recalcitrant members of your committee. Fight for the Consumer Financial Protection Agency – the people and consumer groups will support you.
Why not convene a representative group of them, including aggrieved individuals, at a news conference to demonstrate your determination to reach out to the people of our country?
In addition to the news conference you should do two additional things:
1. Invite Senators Shelby and Corker to barnstorm with you in Alabama and Tennessee respectively and see whether the citizens of those states support a strong and independent Consumer Financial Protection Agency.
2. Introduce legislation to create a Financial Consumers’ Association, supported by membership dues and controlled by its members who would elect a board of directors that could hire researchers, organizers, accountants and lawyers. A Financial Consumers’ Associations would augment the work of the CFPA by:
1. Representing consumer interests before regulatory agencies, legislative bodies, and the courts, and in negotiations with financial service providers;
2. Advocating policies before regulatory bodies that will ensure reasonable access to credit for all consumers;
3. Evaluating the performance of mortgage lenders and monitor the availability of financial services to less affluent and minority borrowers; and
4. Providing policymakers, consumers, workers, shareholders, taxpayers and the news media with timely information on the effects of financial industry and government initiatives.
A Financial Consumers’ Association would enhance the influence of consumers in the policy-making process and empower citizens by educating them, uniting them, and giving them a meaningful voice in directly shaping financial institutions’ consumer policies.
Senator Dodd, stand up to the banking interests and the anti-consumer Senators who want to derail the CFPA. Challenge your fellow Senators to cast a vote for or against a strong, independent CFPA. The voters deserve to know who represents their interests.