April 19, 2011
The following is an excerpt from remarks by Deputy Secretary Neal S. Wolin before Pew Charitable Trusts:
“Fifth, critics suggest that the Consumer Financial Protection Bureau will stifle consumer choice and innovation, or interfere with the role of existing regulators. And they also claim that the agency isn’t accountable.
Rather than limiting choice, the CFPB will be essential to creating real choice for consumers. The system we had before allowed lenders to hide the true costs of financial products in hidden fees and interest rate changes. Consumers often didn’t get the information they needed to understand the loan they were taking out or the credit card agreement they were signing. That’s not choice.
Real choice is about having the information to make the right decisions. The CFPB’s job is to deter deceptive and abusive practices, promote clear disclosure, and help consumers get the information they need. With that information, consumers will have real choice – they will be able to understand what products and services are best for them and to make fully informed financial decisions.
And as consumers begin to make more informed financial decisions, it will raise the bar for the products and services offered to them. More empowered consumers will motivate the financial sector to offer new and better options. Rather than stifling innovation, the CFPB will catalyze it.
I want to emphasize that the CFPB’s mission – helping consumers get good information and cracking down on deceptive and abusive practices – in no way interferes with the role of prudential regulators. What we had before – a patchwork system where too many agencies were responsible for consumer protection, but none of them actually focused on it – that system simply didn’t work.
The existence of the CFPB allows prudential regulators to focus on their core tasks – making sure that banks have the capital, the liquidity, and the risk-management tools to ensure safety and soundness in the system. It allows the CFPB to focus on its own single task – to make sure that consumer financial products are offered in a fair, transparent, and competitive way.
And the agency will be accountable in executing that task. The CFPB was created because in the old system, no one was truly accountable for consumer protection. Now, a single consumer agency answers to Congress and the American people. Dodd-Frank includes several provisions to ensure the agency’s accountability.
The CFPB must submit annual reports to Congress, the Director must testify multiple times each year on the agency’s budget and activities, and the GAO audits the CFPB’s expenditures annually. Furthermore, the CFPB is subject to the oversight of the inspectors general of Treasury and the Federal Reserve. And most importantly, there is direct oversight of the agency’s rulemaking: the FSOC can review and even reject the CFPB’s rules, and, as with any other regulator, Congress has the ability to overturn any of the CFPB’s rules.”
Click here to read Deputy Secretary Wolin’s full remarks on the Dodd-Frank financial reform legislation.