Halloween Over, But Congress Mixing Up Witches’ Brew of Bank Rollbacks Anyway
By Ed Mierzwinski, U.S. PIRG
It’s Halloween again in the banking committees on Capitol Hill, with tricks for consumers and taxpayers, and treats for banks and payday lenders. The 2008 financial collapse? Their view: Really? That economic collapse of 2008 is so much just yesterday’s news; you need to put the collapse in your rear view mirror and release the banks! Our view: Wait, aren’t the banks enjoying record profits; does the economy need to bear that huge burden of added risk?
Yesterday, the Senate Banking Committee announced a bi-partisan bill designed to weaken big bank regulations in numerous ways. The bill is strongly opposed by ranking Democrat Sherrod Brown (D-OH), who had tried for months to get Chairman Mike Crapo (R-ID) to agree to a more tailored community bank and credit union reform package, but the big banks wanted in and got their way. Unfortunately, with its strong bi-partisan backing, it will be difficult to stop the bill. The bill, which has not yet been released in statutory language, does include a modest version of our proposal for a free credit freeze, yet the negative provisions of the bill cannot in any way be offset by the free freeze proposal. Statement of the PIRG-backed Americans for Financial Reform (AFR) coalition.
Also today, beginning this morning, the House Financial Services Committee votes on nearly two dozen bills. The worst (HR3299 (McHenry-NC/S1642 (Warner-VA)), the so-called Protecting Consumers’ Access to Credit Act, would overturn a court decision and allow payday lenders, fintech companies and others seeking to avoid strong state laws with a new rent-a-bank scheme. Yes, it’s Halloween again on Capitol Hill, with tricks for consumers and taxpayers, and treats for banks and payday lenders. U.S. PIRG and the state PIRGs are part of a coalition of over 150 consumer, community and civil rights groups opposed to the proposal. From our letter:
This bill is a massive attack on state consumer protection laws. In a letter by 20 State Attorneys General opposing provisions in another bill that would have overturned the Madden decision, the state law enforcement officers warned that the bill “would restrict states’ abilities to enforce interest rate caps. It is essential to preserve the ability of individual states to enforce their existing usury caps and oppose any measures to enact a federal law that would preempt state usury caps.” In fact, the Colorado Attorney General is in the midst of challenging online 6 lenders’ use of a rent-a-bank scheme to make loans in violation of the state’s usury limits. This bill aims to thwart actions like these that seek to enforce state laws.
Today’s House FSC package of bills includes numerous other bills that harm investors, taxpayers, homeowners and all consumers. In its letter, AFR notes that at least a dozen of the bills to be considered are very harmful:
Some of these bills would cause major damage to financial protections, such as HR 4292 and HR 4293 reducing bank capital requirements, HR 1153 and HR 3299 which would harm consumers, HR 4267 and HR 4279 which harm investors, and HR 4015 which would severely damage shareholder opportunities to affect corporate policy.