Advocating For A Consumer Financial Protection Association
Amelia Tyagi, on Marketplace today, arguing that a Consumer Financial Protection Association could help level the playing field and force banks to be honest with their customers:
Once upon a time, banking was a pretty boring business. Banks took deposits, made loans, and people paid them back. Profits were modest but predictable.
And then the industry was deregulated, and all bets were off. No longer did banks make their profits from reasonably priced loans to people who were able to pay. Instead, pre-approved credit card offers flooded the mailbox of every man, woman, and child. Opening a checking account became free, while bounced check fees skyrocketed.
For most banks the real profits now come from late fees, balloon payments, default interest rates, and a host of other tricks and traps. In other words, making a profit has become an exercise in misdirection and misinformation. Sneaky has become the norm. [...] The marketplace for financial services hasn’t been free — or fair — for a long time.
There is also some noise that a new protection agency could stifle innovation. But is an over-the-limit fee really an innovation, or just a cheap trick designed to fool customers into believing a product costs one price when the majority of customers actually pay far more?
Tyagi is the daughter of Elizabeth Warren. Together she and her mother have authored two books and several articles, one of which popularized the idea of a Consumer Financial Protection Association. It was included in the Harvard Review’s Breakthrough Ideas for 2009.