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Americans for Tax Reform supports Senators McConnell (R-Ky.) and Shelby’s (R-Al.), amendment (#3826) to S. 3217, the Restoring American Financial Stability Act of 2010, which looks to create a new consumer protection agency within the Federal Deposit Insurance Corporation (FDIC).

Since its inception, the FDIC has protected and reassured consumers during times of economy uncertainty making it entirely appropriate and consistent with the mission of the FDIC to place the Division of Consumer Financial Protection with the FDIC.

Once created, the Division will be led by a presidentially appointed and Senate confirmed Director. Instead of reinventing the wheel, the newly created Division will utilize the resources already available to the FDIC. Regulations and orders will have to be approved by the Board of the FDIC.

Board approval is necessary to ensure that the actions taken by the Division appropriately consider financial institutions security while instituting consumer protections. Once approved, the Division will have the authority to promulgate rules for all of the enumerated consumer protection statutes.

The Division will have principal supervision and enforcement authority over large non-bank mortgage originators, and other financial services providers who have violated the consumer protection statutes. Not overstepping its bounds, primary supervision and enforcement for our nations’ banks, thrifts and credit unions will remain with their primary prudential regulator.  In addition, the FDIC will continue to have backup enforcement authority over banks and thrifts.  

This plan for supervision and enforcement will establish clear lines of accountability to ensure that consumers are protected, while also utilizing existing resources within the federal regulatory system, including relying on the existing authority of the FTC which oversees non-depositories engaged in activities covered under the enumerated consumer protection statutes.

Successfully drawing from a well established consumer protection agency, the FDIC, Amendment #3826 combines additional consumer security with efficiency.

ATR urges all Senators to support the McConnell-Shelby amendment.

For more information, contact Brian Johnson at bjohnson@atr.org