Why We Need the Consumer Financial Protection Bureau

“My view is that Washington and the regulators are there to serve the banks.” – Republican Rep. Spencer Bachus, Chairman of the House Financial Services Committee

In 1972, the Nixon Administration created the Consumer Product Safety Commission (CPSC). Its purpose was relatively straightforward: to enforce uniform standards, minimum levels of safety, on consumer products sold in the United States.

Forty years later, we can say that the CPSC has been a magnificent success. Product-related death and injury rates have declined significantly since its creation. Its safety standards for cigarette lighters, cribs, and baby walkers save more than $2 billion annually — more than its entire cumulative budget since 1972.

So it makes sense that Harvard law professor Elizabeth Warren drew on the CPSC as inspiration for the Consumer Financial Protection Bureau (CFPB), which Congress created in the Dodd-Frank Act of 2010.

“It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house,” wrote Warren back in 2007. “But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street — and the mortgage won’t even carry a disclosure of that fact to the homeowner.”   Continue reading “Why We Need the Consumer Financial Protection Bureau”