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Worse than the Status Quo for Families and Community Banks

Communications Director Dan Pfeiffer takes on the Republican alternative on consumer protections in Wall Street Reform.

Earlier this week we put out a list of “10 Most Wanted Lobbyist Loopholes” – examples of how industry lobbyists are looking to weaken Wall Street reform. It turns out that we underestimated their ambition.  A new amendment put forward by Senator Shelby on consumer financial protection would not just weaken the bill, it would weaken the status quo.

This new proposal keeps consumer protection oversight under banks' prudential supervisors, whose primary responsibility is safety and soundness of the bank, not consumer welfare. The record on this arrangement is unacceptable. It also leaves payday lenders, debt collectors, and other financial services operations with a huge exemption from federal oversight simply because they aren’t called “banks.”  It leaves community banks to compete on an unlevel playing field with their non-bank competitors.  And it would prohibit updating existing subprime regulations that protect consumers from abusive loans, and it would block states from enforcing the law.

We are heartened to see that on some issues the Republicans have decided to join Democrats in a constructive, bipartisan way.  But on the issue that will arguably do the most to benefit everyday Americans on a day to day basis – that is, consumer protection – they continue to oppose all serious efforts at reform. Two years after a financial crisis that was exacerbated by the lack of transparency in the market for consumer financial products, the Republicans would still rather stand with the big banks than with American families.

Dan Pfeiffer is White House Communications Director