WASHINGTON, D.C. — Consumer Watchdog applauded approval by the U.S. House of Representatives of its financial regulatory overhaul bill, H.R. 4173, including the creation of a strong consumer regulator, but cautioned that more must be done to protect American homes and savings and prevent the big banks and Wall Street from dragging the nation into the next economic crisis.
An amendment to the bill that would have eliminated the consumer regulator from the bill entirely was defeated by just 15 votes, demonstrating the continuing efforts of the financial industry, which gave $28 million to members of the House this year, to defeat real reform.
Critical protections for American consumers, homeowners and investors are missing from the House bill. Problems that still must be addressed include:
* Limits on the authority of states to act on citizens’ behalf to address financial abuses (inserted into the bill late Wednesday after New Democrats held the bill hostage; click here to read the Consumer Watchdog analysis of financial industry contributions to New Dems and amendment sponsors here.)
* Loopholes in derivatives regulation proposal that could leave 30% or more of the multi-trillion dollar market unregulated
* Exemptions for some public firms from outside audits of their books (rolling back provisions of post-Enron accounting reforms)
* Little authority to break up banks that endanger the financial system with their size or behavior
* No relief for struggling homeowners to allow bankruptcy judges to adjust the terms of home mortgages
“It’s vital that the consumer protection agency withstood the assault from the banks, but restrictions on states’ ability to protect consumers and exemptions for some financial institutions must still be addressed. The House bill takes critical steps towards reform, but was weakened by the financial firms who want to avoid strong oversight,” said Carmen Balber, Washington director for Consumer Watchdog. “We look to the Senate to strengthen financial reform as it moves forward so consumers are truly protected against abuses and outrageous treatment by lenders and financial institutions.”
Click here to download a detailed analysis of the good and bad in the bill, compiled by Americans for Financial Reform.
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Consumer Watchdog is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us online at: www.ConsumerWatchdog.org.
