In Defense of Consumer Protection

Collective greed and stupidity begat years of irresponsible borrowing, lending and spending; which begat overly aggressive remedial institutional response such as mind-numbing ill-conceived foreclosures, frenzied short sales, indiscriminate account closings and ubiquitous credit line cramdowns; which begat the extinction of millions of small, medium and large economic enterprises deemed small enough to fail; which begat shrinking 401ks, collapsing consumer confidence and economic ruination for millions of Americans; which begat the terrifyingly ballooning government deficit; which could beget the S&P downgrade of America’s credit standing; which will beget the Chinese and our other fair-weather friends fleeing our shores in search of the next best investment.

That said, why do conservatives believe that a strong consumer advocacy and enforcement agency by definition is antithetical to business? It doesn’t have to be a zero-sum game. Doesn’t a level playing field help to eliminate adverse relationships between consumers and business? Isn’t it better when legitimate businesses are fairly competing against other legitimate businesses for the favor of the consumer?

Shouldn’t government and business be promoting financial literacy? Financial illiteracy leads to impulsive and uninformed decisions. Clueless borrowers are a danger to themselves and the businesses with which they do business.

Should it not be the policy of this nation to promote a stable housing environment where we strive to keep consumers in their homes and find a way for lenders and institutional investors to mitigate and perhaps fully recover potential losses incurred by irresponsibility on all sides of the selling, lending and borrowing equation?

Wholesale foreclosures that don’t follow the rules of financial engagement foment borrower resistance, generate their own brand of moral hazard, and create an environment of such hostility that trust can never be regained. That doesn’t bode well for business.

Foreclosing on the homes of active duty personnel in violation of federal law, or properties where no mortgage ever existed cannot possibly lead to investor or borrower confidence.

If we believe the concept that “financial readiness” leads to “mission readiness,” how can we allow our soldiers and their families to be defenseless in the face of financial predators and identity thieves who hover around their bases, attempt to beguile them online and work assiduously to lure them into a company store environment of never-ending debt.

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It is ironic to me that those who have been historically protective of the defense budget and supportive of a strong and prepared military, are so callous when it comes to the creation, empowerment and funding of the Consumer Financial Protection Bureau, the one agency designed to defend America’s defenders against the financial predators who cause them stress and distract them. This reminds me of the scandal that erupted during Donald Rumsfeld’s tenure at Defense, when we sent our troops to war in Iraq—where IEDs were hidden under practically every few feet of dirt, vehicle or building—without up-armored Humvees. While Washington postured and debated, our soldiers and their families paid the ultimate price. As public outrage boiled over, Congress finally stood up and got our defenders the protection they so desperately needed. Make no mistake, in the war for consumer protection, the IEDs are predatory loans, rampant foreclosures and countless other financial dangers, and none of us have the armor we need to adequately protect ourselves from them. The fact that our men and women in uniform have to worry about this while trying to fight two wars, as politicians seek to further their agendas, is outrageous.

We all “rise and sleep under the blanket of freedom” that our servicemen and women provide (kudos to Aaron Sorkin’s “A Few Good Men”). Lest we forget, July 21 is but a few short weeks away and without a tough, aggressive leader at the helm and a strong, proactive Consumer Financial Protection Bureau, the economic predators among us, if left to their own devices, would have our military personnel and, indeed millions of Americans, shivering under blankets in homeless shelters.

Image: forwardstl, via Flickr