Vilsack promotes idea of federal consumer financial protection agency

DES MOINES – American consumers stand to benefit from a proposed federal consumer financial protection agency, U.S. Agriculture Secretary Tom Vilsack said Tuesday.

Vilsack used a news conference with Iowa Attorney General Tom Miller during a visit to Iowa to promote the Obama administration proposal.

The reforms are currently being considered in Congress and are expected to face a vote by a House committee this week.

Proponents of the idea point to unchecked predatory lending practices that they say helped feed the financial crisis and led to a recent wave of home foreclosures. The proposed agency would be charged with establishing rules for the consumer financial marketplace and enforcing them.

Calling it a critical national debate, Vilsack said the agency will help give consumers better information on the financial transactions they are involved in.

“We want to provide information that's simple, that's transparent and accurate,” Vilsack said.

American families are paying the price for weak regulations, Vilsack said. From October to December 2008, American families lost more than $5 trillion in net worth as home values and stock prices dropped, Vilsack said.

A financial protection agency will help ensure that future mistakes by a few will not do so much harm for so many, he said.

Vilsack noted that the USDA has a stake in the issue because of its home lending program.

Miller said too many federal agencies have separate authorities to protect consumers and those agencies do not have consumer protection as a priority. He sees an advantage in having a single agency with protecting consumers as its primary role.

Miller's office has its own consumer protection division, but he said the Obama proposal would not pre-empt state laws. States also could continue to enforce federal regulations.

“There would be this wonderful cooperative partnership between the states and the federal government,” Miller said, calling it a “home run for consumers.”

The proposal has faced opposition by banking and business interests, especially for allowing states to have an enforcement role.

Anthony Carroll, a lobbyist for AARP in Iowa, said Americans' retirement savings have been decimated by the economic crisis. He said the organization sees an urgent need for an agency that advocates on the behalf of consumers.

“Unfortunately, the predatory practices that contributed to this crisis are still far too prevalent,” Carroll said.