Effort to establish Consumer office under FDIC fails
Washington, D.C. - Efforts to create a new office of consumer protection within the federal entity that oversees the financial industry failed on a nearly party-line vote of 38 to 61 in the U.S. Senate. Idaho Senator Mike Crapo, a member of the Senate Banking Committee, voted in support of the consumer protection amendment to S. 3217, the American Financial Stability Act of 2010. The amendment would have created the office within the Federal Deposit Insurance Corporation (FDIC).
""We need to ensure that consumers are not shortchanged by a system that will end up increasing their costs and limiting their options," Crapo said. "The FDIC is a respected watchdog that Americans count on to protect them from loss when a financial institution fails. The proposed Division of Consumer Financial Protection makes sense inside the FDIC and, under this amendment, the office will be subjected to Congressional oversight, something that is lacking under the new proposal."
But the effort to elevate the profile of the consumer protection division without trumping safety and soundness regulators was defeated on the nearly party-line vote. The Republican Consumer Protection alternative addresses the consumer protection deficiencies exposed by the crisis and away from small businesses. In addition, it would strengthen the link and coordination between prudential supervision and consumer protections rather than severing it.
"Over the past few weeks, I have received hundreds of letters from Idahoans, opposing a massive new government entity whose power and autonomy have no current equivalent anywhere else in the federal government," Crapo added. "There are strong implications that the legislation will impose new costs and regulatory burdens on traditional banks that will make it more difficult for them to serve their communities and more expensive for individuals and small business to get loans. In addition, orthodontists, doctors, and dentists from Idaho as well as across the country could be covered under this legislation if they extend credit in more than four installments. That would drive up costs for families. This super-bureaucracy is a big government response that squarely hits Main Street, not Wall Street."