Durbin, Schumer, Kennedy Ask Treasury to Support Creation of a Financial Product Safety Commission

[WASHINGTON, D.C.] – Assistant Senate Majority Leader Dick Durbin (D-IL), Senator Chuck Schumer (D-NY) and Senator Ted Kennedy (D-MA) released a letter to Treasury Secretary Tim Geithner today, encouraging him to include their proposed Financial Product Safety Commission in the Administration’s plans for financial market reforms.


“[T]here is no reason for us to have regulations that prevent toasters from exploding into flames, but no protections to prevent mortgages and credit cards from doing the same,” the senators wrote. “Deceptive and dangerous financial products imperil millions of individual families. A Financial Product Safety Commission would set baseline safety standards for financial products like mortgages and credit cards, just as the Consumer Product Safety Commission sets standards for consumer goods.”


The senators sent the letter yesterday; the same day President Obama and Secretary Geithner met with the heads of the nation’s largest credit card companies to discuss lending policies. The letter also comes at a time of rising credit card delinquencies and defaults.


“The failure to keep dangerous and deceptive financial products out of the market was a key cause of the current financial crisis,” said Elizabeth Warren, Chair of the Congressional Oversight Panel and Leo Gottlieb Professor at Harvard Law School. “We need a Financial Products Safety Commission, not only to protect American families from predatory credit card and mortgage products, but also to restore confidence in our financial system and achieve a sustainable economy for our children and grandchildren.”


Last month, the senators introduced legislation to create a Financial Product Safety Commission - a single government agency in charge of ensuring that the offering of financial products to consumers is responsible, accountable, and transparent. This new agency would:


• Reduce consumer risk in using financial products by preventing predatory or deceptive financial practices and educating consumers on the responsible use of financial products and services;


• Coordinate enforcement with the other federal and state regulators and with the private sector to establish a floor beneath which consumer financial product safety could not fall; and


• Report regularly to the public regarding the state of consumer financial product safety and recommend the steps that should be taken to improve the value of financial products for consumers.


The bill is supported by over 55 national and state organizations, including Consumer Federation of America, Center for Responsible Lending, Leadership Conference on Civil Rights, NAACP, La Raza, AFL-CIO, SEIU, National Consumer Law Center, Consumers Union, Public Citizen, and US PIRG.


A copy of the full letter is attached.