"This was a huge victory," Ed Mierzwinski, consumer program director for
advocacy group US-PIRG, told WalletPop in an interview. Mierzwinski,
along with Congressional Oversight Panel chair Elizabeth Warren, said in
a recent conference call that while the passage of the CARD Act was a
big step, it's only a first step.
Warren warned that credit-card companies are already ferreting out
loopholes, according to the
Huffington Post's
account
of the call. PIRG's Mierzwinski says his group pushed unsuccessfully
for the Federal Reserve to add tougher language that would put a stop to
credit card companies exploiting loopholes in the legislation. "Banks
will evade the law because banks are like scorpions. It's in their
nature," he says.
The absolutely necessary next step, he says, is for the government to
create a Consumer Finance Protection Agency (CFPA). In the minds of its
champions, this regulatory body would take charge of all retail banking
enforcement actions, including those related to bank accounts, credit
cards, auto loans and the many other ways average Americans interact
with the financial industry.
The idea of a CFPA was a cornerstone of the Administration's plan to
reform Wall Street in the wake of the bank ballots, but some key members
of Congress have signaled recently that they might no longer push for
such an agency.
Mierzwinski says a CFPA is the only way to protect consumers. Currently,
banks can be regulated by any one of
four different agencies;
banks regularly pick and choose how they're structured so they can be
regulated by the most lenient of these organizations. (This is a concept
called "regulatory arbitrage," for those of you who like your vocab
words.) If Congress were to create a CFPA,
all banks would be
subject to the same rules.
"The CARD Act is a tremendous and historic victory," Mierzwinski says.
"It bans the worst credit card practices. It bans 'anytime, any reason'
changes to people's accounts. It bans retroactive rate increases."
However, in order for the CARD Act to be enforced the way its advocates
envision, a consumer-oriented agency will need to watch out for the
"little guys."
