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Published: October 2009

Federal law should be a floor, not a ceiling, for consumer protection

Coalition: Americans for Financial Reform

As a part of Americans for Financial Reform coalition, Consumer Action sent a letter to Congress requesting that they not preempt states' authority in Consumer Financial Protection Agency (CFPA) legislation.

Below is an excerpt from the letter:

On behalf of the nearly 200 national, state and local consumer, employee, investor, community and civil rights organizations of Americans for Financial Reform, we are writing to convey our strong support for the creation of a Consumer Financial Protection Agency.  We also feel strongly that legislation creating the Consumer Financial Protection Agency (CFPA) must treat all institutions equally, rather than allowing big banks to ignore state consumer protection laws and to treat federal laws a ceiling, not a floor.  Legislation that perpetuates preemption of states’ authority to protect their citizens from harmful banking products would continue the failed consumer protection policies of the past thirteen years.

The CFPA will ensure that consumer protection receives the critical attention it deserves, in contrast to the second class status it has had with federal banking regulators who have consistently failed consumers in the past and even blocked states from protecting their own citizens.  But even with a CFPA, federal rules must be a floor, not a ceiling, for everyone.  States have a vital role in our constitutional system and must be able to act before problems become a national problem and before a consensus emerges on a national solution.  Federal preemption of state law contributed to a rise in predatory lending and was a significant cause of the current economic crisis.  The study just released by the UNC Center for Community Capital show that states that adopted tough anti-predatory lending laws, before the OCC preempted all such laws, had lower foreclosure rates than states without those laws, and that national banks made riskier loans after preemption was extended.

We strongly urge all members to support the language in H.R. 3126 that preserves state authority, and to oppose any efforts to preempt it.

Lead Organization

Americans for Financial Reform

Other Organizations

ACORN | Americans for Financial Reform | Americans for Fairness in Lending | A New Way Forward | Center For Responsible Lending | Consumer Watchdog | Consumer Union | Consumer Federation of America | Demos | Leadership Conference on Civil Rights | National Association of Consumer Advocates | National Community Reinvestment Coalition | National Consumer Law Center (on behalf of its low income clients) | National Fair Housing Alliance | National People’s Action | OMB Watch | Public Citizen | Teamsters | The Greenlining Institute | Western States Center | Woodstock Institute | U. S. PIRG

More Information

Americans for Financial Reform

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