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Yingling testifies on proposed consumer protection agency

 ABA testifies on proposal to create consumer financial protection agency


On June 24, the American Bankers Association responded to the Obama administration's proposal to create a new consumer regulatory body for financial services that would be separate from any future prudential regulatory structure. 
 
 ABA president and CEO Ed Yingling told the House Financial Services Committee that creating a new consumer regulatory agency is not the solution to the Nation's current economic problems. 
 
          “There is no shortage of laws designed to protect consumers,” said Yingling.  “Making improvements under the existing regulatory structures – particularly aimed at filling the gaps of regulation and supervision of nonbank financial providers – is likely to be quicker and more successful than a separate consumer regulator.”  
 
          Regulations aimed at ensuring bank safety and soundness and regulation designed to protect consumers are essentially two sides of the same coin, Yingling told the Committee. He also said that an integrated and comprehensive approach to both is preferable.   
 
          “Separating consumer protection from safety and soundness will lead to conflicts, duplication and inconsistent rules,” he told the Committee.  “Such developments would place banks in an untenable position if, for example, the consumer regulator disagrees with the safety and soundness regulator.
 
          “Consumer protection is not just about the financial product, it is also about the financial integrity of the company offering the product,” he said.  “It is a mistake to separate the regulation of an institution from the regulation of its products.” 
 
          Yingling also emphasized that the key focus of change should be on closing existing regulatory gaps that contributed to the current economic crisis. Other improvements inside the banking regulatory process can be made later.  
 
          “It is now widely understood that the current economic situation originated primarily in the largely unregulated non-bank sector,” Yingling said.  “Banks watched as mortgage brokers and others made loans to consumers that a good banker just would not make and they now face the prospect of another burdensome layer of regulation aimed primarily at their less-regulated or unregulated competitors.  It is simply unfair to inflict another burden on these banks that had nothing to do with the problems that were created.”  

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