Please stand up if you support financial deregulation
There was no shortage of the first 100 days of the Trump administration broken promises to American workers and families. But the President’s disturbing promise “to make ‘a big number’»On Dodd-Frank – the financial reform law adopted in 2010 – can in fact be kept. Congress takes a big step towards that goal this week when the House Financial Services Committee votes on the Financial Choice Act, the bill from committee chairman Jeb Hensarling (R-TX) that would largely reverse financial reform. The 593-page bill would be take a wrecking ball to financial reform, undermining the tools regulators use to protect the financial system and decimating key protections for consumers and investors.
The CHOICE Act – short for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs – should it go forward, is another action by this administration and Congress aimed at helping businesses and businesses. rich. This flies in the face of voter support for strong financial sector accountability and various consumer protections that the bill would eliminate.
Most voters think we have too little financial regulation, not too much
Americans overwhelmingly support greater accountability for the financial sector. A poll of 1,000 probable voters made last june found that 82% of Democrats and 66% of Republicans surveyed believe that “Wall Street financial firms [should] be held accountable with stricter rules and enforcement. In the same poll, 59% of all Americans polled believe that “Wall Street and the financial sector are … still engaged in reckless practices that pose a permanent threat to the economy,” including 69% of Democrats and 48% of republicans. Three-quarters globally support Wall Street reform efforts.
This support extends to the Consumer Financial Protection Bureau, or CFPB, a new agency created by Congress in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In its short history, the CFPB has come back almost $ 12 to $ 29 million Americans who have been victims of harmful financial practices and have over 1.1 million complaints by members of the public against banks, credit bureaus and other financial companies. He also made significant progress ensure a fair financial market for communities of color and fighting against LGBT discrimination in loans. The June survey finds that 8 out of 10 Democrats, and nearly 6 in 10 Republicans support the agency’s mission when presented to them. And when presented with arguments for and against the CFPB, 79% of Democrats and 46% of Republicans agree with the need for regulation against dangerous financial products rather than arguing: “The CFPB is another onerous and irresponsible federal bureaucracy that we do not need. . Meanwhile, President Hensarling has considered the CFPB be “totally irresponsible” and “a rogue agency”, and the CHOICE law strip the agency of most of its power.
While Democrats are a little more likely than Republicans to argue that the financial sector needs more regulation, Trump voters as a whole also support those regulations. As of December 2016 Glover Park Group / Morning Consult survey of self-identified Trump voters found that only about one in five respondents felt there was too much government regulation from Wall Street or the big banks – and about a third felt these companies actually did not have enough regulatory. Fifty-five percent wanted the CFPB expanded or the agency left alone, and 50 percent said the same about the U.S. Securities and Exchange Commission.
Most voters support specific consumer and investor protections that the CHOICE law would remove
The CHOICE Act would force sweeping changes to financial regulation, but several of its provisions target specific protections that voters widely appreciate.
Last year, the CFPB proposed a rule to regulate payday loans and car titles that prey on vulnerable borrowers, leaving them with expensive credit that they have great difficulty in repaying. The CHOICE law would prevent the CFPB from tackling this problem. Yet when 800 voters were asked about payday loans last may71 percent of voters said there should be additional regulation, including 82 percent of Democrats and 63 percent of Republicans. And 74 percent of former payday loan recipients or their families and friends also support CFPB regulation. This is consistent with voters’ opposition to payday lending at polling stations. Most recently, 76% of South Dakotans voted in 2016 to impose an interest rate cap to fight these loans, despite a confused voting process.
The CFPB is also in the process of finalizing a rule to regulate the use of compulsory consumer arbitration clauses in financial product contracts that would be blocked by the CHOICE law. Many contracts, whether for one Bank account, a cellphone, or even a Snuggie, contain language that prohibits individuals from suing a business and instead requires that any dispute be handled through a private process called arbitration. The vast majority of likely voters polled in July 2015 by Lake Research Partners support the right of bank customers to bring complaints to courtOf which 80% of Democrats and 70% of Republicans, 60% of Democrats and 55% of Republicans expressing their support.
The CHOICE Act would also eliminate the U.S. Department of Labor fiduciary rule, a rule finalized last April after a six-year process that requires all financial advisors to act in the best interests of their clients. The rule that the Trump administration already delayed, fills a loophole that allows professionals to give sales pitches presented as unbiased financial advice. Keeping this loophole open costs savers and retirees $ 17 billion per year with higher fees and lower returns. Earlier this year, 93% of Americans probe by investment firm Financial Engines said they considered it important for all retirement financial advisors to be legally required to put the interests of their clients first, and more than half wrongly said that this legal obligation already exists. And 65% of Trump voters surveyed last December said this rule should remain in force.
The CHOICE law would have devastating effects on the ability of regulators to prevent and deal with future financial crises, and it would weaken protections for American families in the market. Few voters want to go back and open the door to dangerous and predatory financial practices. This raises the question of who is really in favor of overturning these regulations. With about $ 2.7 million per day In lobbying and campaigning contributions to financial interests during the last cycle of Congress, it is worth asking members who they will listen to to overturn financial reform: special interests or their constituents.
Joe Valenti is the Director of Consumer Finance at the Center for American Progress.