The upcoming financial regulatory reform bill currently under consideration with the United States Senate Banking Committee will probably call for an agency dedicated to protecting consumers from abusive financial practices and products, reports The Huffington Post. Committee chairman Christopher Dodd of Connecticut is expected to release the latest version of the bill later this month.
According to The Huffington Post, the agency will be authorized to regulate mortgages, credit card policies and consumer loans with a budget of its own, separate from the congressional appropriations process “so it can’t be harmed by lawmakers bent on taking away its power.” In other words: the agency will be able to set its own budget and determine its own policies, with the Senate allowed to confirm candidates nominated by the White House for its executive.
The proposal comes after months of bipartisan negotiations with Dodd and the committee’s ranking Republican, Richard Shelby of Alabama, spearheading the two camps. Where Dodd championed an agency solely tasked to protect consumers, Shelby was anxious about establishing a new institution independent of existing financial oversight.
Last Friday, Dodd admitted that he and Shelby had “reached an impasse” but it would appear that the senior Senator from Connecticut won the argument for, so claims The Huffington Post, “the new organization’s decisions will likely not be subject to vetoes by the regulators in charge of overseeing the health of banks and the financial system as a whole.” That way, it can focus on protecting consumers without having to worry about fellow regulators overruling its decisions for the sake of safeguarding banks.
The danger involved in establishing an array of oversight and protection agencies for different segments of the same market is that each becomes fixated on its own special interest, losing sight of the sector’s interests on the whole — let alone, the economy’s interests on the whole.
There is also a good argument to be made against consumer protection in principle. Such statues elevate the consumer to a status superior to that of the producer for although “consumer protection” applies to everyone, the implication that there exists a separate caste of “consumers” in society opens the door to the creation of a multitude of “protective” agencies, each with varying degrees of independence but all obstructing the workings of the free market — which, of course, is precisely their purpose.
There ought to be no special group rights of any kind; only individual rights which apply equally to all men. All men are protected from injury or fraud, not just “consumers”. If a business willfully injures or cheats men, it is a matter to be proved and punished in a court of law. There is no justice in preventive law which presumes businessmen guilty until proven innocent — especially not when such law is practiced by agencies that can operate almost free of congressional oversight. Who then protects society against the corruption, cupidity and vindictiveness of its so-called protectors?