US consumer organizations defend watchdog for consumer financial products

To better protect consumers of mortgages, credit cards and other such products from abuses by lenders the Obama administration seeks to establish a Consumer Financial Protection Agency (CFPA). This proposal faces stiff headwinds in the Senate. While the majority of democrats want an independent agency that can clamp down on abusive mortgages and credit cards, Republicans want a tamer agency.

Republicans favour a solution in which a consumer protection unit is established within a much larger bank regulator. US consumer organizations criticize such a solution. 

Travis Plunkett, legislative director of the Consumer Federation of America argues that the agency charged with ensuring the soundness of the nation’s financial institution shouldn’t also be responsible for protecting consumers. It was not difficult to imagine a clash of interests when firms profit from unfair or abusive practices, taking advantage of confused consumers. He argued: “It would be like putting the Department of Commerce in charge of the EPA.”


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Source: Reuters and The Washington Independent