The Obama administration has proposed the creation of a new agency, a Consumer Financial Protection Agency (CFPA). This could be a great thing, if it actually results in an agency that takes consumer protection seriously and has the power to do it. It could also be disastrous, if the new agency just inherits the existing dysfunctional culture and weak rules and only part of the power of the existing regulators. Here are NPA’s recommendations for an effective CFPA:
1. Do Not Separate CRA Examinations from CRA Enforcement The CFPA must have explicit authority to stop or delay any financial institutions application for merger, expansion or branch closure. The denial of such an application should be an automatic outcome if the institution receives a CRA grade below Satisfactory.
2. Have CRA Cover All Lending, Not Just Depository Institution Lending
3. Ensure that CFPA Focus Remains on Making Credit Available, Not Just Stamping Out Bad Products and Practices
4. Fund The CFPA through Fees on Financial Institutions Do not leave the funding of CFPA open to political manipulation through the appropriations or to the instability and potential conflict of interest problems of transaction fees.
5. Ensure That On-The-Ground Community Voices Are at the Table CFPA’s Board should have a seat reserved for a community-based group. The proposed Advisory Council should have specific authority to review proposed Agency actions and plans before they are implemented.
6. Retrain CRA Examination Staff to Ensure a Culture of True Enforcement
7. Make Data Publicly Available and Publicly Usable. The CFPA should expand the fields currently collected under HMDA, establish a public loan modification database and ensure that all data is released in a timely and user-friendly fashion.
Ten percent of the homes in Richmond, California are foreclosed. One in ten. Home values have dropped 70%. The statistics don’t prepare you for the reality; on some blocks there are more boarded-up, empty houses than homes – on some, nothing but. Nor does it prepare you for the pain of those victimized by predatory mortgages. Berenice Ramos has already lost her home, but she’s continuing to fight for others in her community. She’s a leader of CCISCO- Contra Costa Interfaith Supporting Community Organizing, a PICO affiliate.