Consumer Protection and Corporate Purses

In this period of painfully partisan politics, it's too easy for the
focus to be on who won today, instead of the American people's needs.
We're witnessing just that in two roiling debates--one over the proposed
Consumer Financial Protection Agency (CFPA), another over the recent
Supreme Court ruling in Citizens United v. Federal Election
Commission.

The new CFPA's sole mandate would be to shield consumers from
deceptive and dangerous financial products and practices. It would have
the authority to not only write rules to better protect consumers, but
also to enforce them. Here's why we need this strong and independent
agency to safeguard consumers.

The government doesn't systematically look out for the interests
of financial product end users. What regulatory authority lies in the
Federal Reserve has largely been ignored for decades. That's how the
financial industry's unscrupulous practices, which contributed heavily
to the collapse of our economy, emerged. There's no reason to believe
that continued authority within the Fed would restore fairness to the
system.

We need a strong consumer financial protection agency for the
same reason we have regulations for food safety, building construction,
or for cars--to protect consumers from the perils of the corner-cutting,
profit-boosting, bottom-line mentality of big businesses.

Consumers deserve reasonable protection from the often-predatory
financial products peddled to them. Those protections must apply not
only to banks but also to non-bank institutions, whose outrageous terms
and rates target the poor and help perpetuate cycles of poverty for
entire communities.

This agency must be independent for two critical reasons. First,
it will have to untangle the complex web of regulations that allows
banking lawyers to find loopholes between various regulatory agencies.
Second, it's contradictory to have a single agency be responsible for
the health of banks and protecting consumers. For instance, hidden fees
buried deep within credit card contracts improve profits of banks at the
expense of consumers who pay the fees. This puts the agency charged
with ensuring the health of banks at odds with the proposed agency in
charge of protecting consumers. And it's the basic reason why banks are
fighting this proposal so hard.

A recent Pew Research Center poll found that 59 percent of
Americans favor a stronger government hand in regulating the financial
industry, while only 33 percent oppose stronger regulation. With a clear
majority of Americans showing support for this kind of financial
reform, what's with the endless back and forth? One answer is that there
are other very powerful forces at work and, as of late, those forces
have been granted even greater access to the inner workings of our
government.

The Supreme Court's Citizens United ruling in January
granted unabated financing of campaign communications by corporations,
equating political spending with the right to freedom of speech, as
listed in the First Amendment. In his first State of the Union address,
President Barack Obama expressed his disappointment and fears of the
potential impacts of the ruling, stating that it would "open the
floodgates for special interests--including foreign corporations--to
spend without limit in our elections."

Obama recognizes that this decision will further undermine our
democracy, as it marginalizes the power of individual voters by handing
more power to corporations. According to a February poll by The
Washington Post and ABC News, 8 out of 10 Americans oppose the
Court's Citizens United ruling.

This Court-approved "power of the purse" casts a shadow over the
financial reform debate. The Supreme Court's ruling will only make
efforts to re-regulate the financial industry more difficult in the
years to come, so long as financial institutions have the ability to
amplify their "voices" by simply writing a larger check.

It's becoming increasingly apparent that when it comes to
lawmaking--whether in the legislative or judicial branch--broad public
support (or opposition), unfortunately, is not enough to bring about
change. The only effective counter to the influence of corporate purses
will be broad public action--a unified movement demanding that we change
the terms under which we are governed--and voices that are heard in the
process.