U.S. PIRG Consumer Blog: Professors endorse consumer agency

Seventy-four law professors from across the country have sent Congressional leaders a joint letter urging enactment of a strong Consumer Financial Protection Agency that does not limit the efforts of state legislators and state attorneys general to protect their citizens. The effort was coordinated by Norm Silber of Hofstra and Jeff Sovern of St. Johns (Jeff's blog entry at Consumer Law and Policy blog.) The professors' news release. Here is their explanation of why the wrongheaded preemptive efforts of the current regulators should be reversed, as the Obama-backed proposal would accomplish:

In our view, whatever merit arguments in favor of preemption have are outweighed by the value of having states operate as laboratories, trying different approaches to lending problems, particularly in dealing with the relatively young problems of predatory lending. It is important that Congress not take a simplistic approach favoring only federal development of consumer protection laws in financial products and services; and that Congress not limit the role of the states to enforcement of state and federal law. State legislatures and courts need to be able to continue to develop consumer protection law. Many of the types of non-bank financial products that will be within the jurisdiction of the CFPA have been regulated up until now only by the states, and their good work should not be undermined. In addition, problems are much more likely to grow larger if they can be addressed only at the federal level and not also by states where they first appear.