Congressman Barney Frank
Representing Massachusetts' 4th District

Chairman Barney Frank of the House Financial Services Committee held a press conference today to discuss his bill to create a federal consumer protection agency. The new agency would regulate financial products like mortgages and credit cards and would provide consumers the clear information they need in order to make educated decisions about their finances.

Congressman Frank was joined by Congresswoman Maxine Waters, Chairman of the Subcommittee on Housing and Community Opportunity, Congressman Luis V. Gutierrez, Chairman of the Subcommittee on Financial Institutions and Consumer Credit, and Congressmen Brad Miller and Keith Ellison of the Financial Services Committee.  Cosponsoring the event was Americans for Financial Reform, a coalition of over 200 union and non-profit organizations, which advocates sound regulation of the financial system. Executive Director Heather Booth spoke on behalf of the organization.

As outlined in Mr. Frank's bill (H.R. 3126), the Consumer Financial Protection Agency would be responsible for informing consumers about financial products, much as the Food and Drug Administration provides information about the contents of food products and the safety of medications.

Before the recent market collapse, many financial institutions engaged in shady practices like offering mortgages to people without verifiable income or assets, virtually assuring that the borrowers would default. Some lenders offered adjustable rate "balloon" mortgages with hidden fees. In the meantime, lenders resold these loans to other institutions, effectively avoiding in risk for the bad loans they had created. This not only hurt individual borrowers, but these actions, repeated tens of millions of times across the country, put the entire financial system at risk.

Chairman Frank criticized deceptive and abusive practices that have been used to reap giant profits, often at high cost to consumers.  He specifically pointed to subprime lending and payday loans as pernicious practices which often ensnare consumers.

Frank told listeners that some companies in the financial services industry were planning to mount fierce opposition against the creation of a new agency.

“The people opposed to this in the financial community have troops on the ground and they have brought them into this effort.  I accept the fact that they want to have a big national debate over this. Frankly, if I were the bankers I would not invite a debate over whether I had been all that great in the consumer area and whether or not people should just trust us." 

Speakers at the press conference expressed their firm determination to fight for the creation of a strong agency to help protect consumers. They were joined by two prominent members of the business community, Tim Duncan, founder of Story Street Wealth Management, and Bennett Freeman, Senior Vice president of Social Research and Policy at Calvert Investments.