There is no question the lack of regulatory oversight played a huge role in the collapse of the mortgage and housing markets.
Yet, the concept of creating a more efficient system to help protect consumers' interest against the predatory lending practices that contributed to this crisis seems to be viewed as absurd by some banks and politicians.
On Friday, a U.S. House committee approved three measures to weaken the power of the Consumer Financial Protection Bureau (CFPB), expected to open in July. The CFPB was formed as a result of the Dodd-Frank financial-overhaul law passed last year. The agency will be in charge of writing mortgages and other financial rules to help protect consumers.
One of the bills approved by the committee Friday would make it easier for the newly formed Financial Stability Oversight Council to block new rules created by the CFPB. A second bill would put a five-member bipartisan commission in charge of the bureau, instead of a single director. And a third bill would prevent the bureau from having any regulatory authority when it opens on July 21 until the Senate confirms a director.
These stalling tactics are unlikely to succeed. Even if the measures win approval of the full House, the Democrat-controlled Senate would probably oppose them and President Obama could also veto the bills.
Still, it's mind-boggling to watch lenders and politicians complain about financial reform after these institutions have received billions of taxpayer dollars in bailouts, while consumers continue to feel the pain of the economic crisis on a daily basis.
The committee's vote on these bills has angered many consumer advocacy organizations.
Here is a statement by the Center for Responsible Lending on the subject:
"By their votes today to weaken the Consumer Financial Protection Bureau (CFPB), a majority of House Financial Services Committee members showed they care little about American’s wallets or our nation’s economic rebound. Instead, they voted to stack the rules in favor of the same lenders and regulators who brought us the subprime mortgage crisis and national financial meltdown."
Really, what's so absurd about an agency that will help prevent financial institutions from taking advantage of consumers?