Push for Formation of Consumer Financial Protection Agency

Consumer advocates and the Illinois attorney general are pushing for an independent federal Consumer Financial Protection Agency.

The agency would protect consumers by setting and enforcing national rules for lenders and others in the financial services industry. It would have broad authority over mortgages, credit cards and payday loans, with the power to enforce existing statues and levy fines for violations.

Illinois Attorney General Lisa Madigan says such an agency would not trump state consumer protection laws already in place if those state laws are stronger. She adds the creation of the CFPA would help state's attorneys go after violators who jump from state to state.

William McNary, head of Citizen Action Illinois, says accountability must be brought to our financial system. "Consumers did not invent adjustable rate, subprime mortgages," McNary said. "Consumers did not profit from steering homeowners who qualified for safe, affordable mortgages into exploding loans. Consumers did not cash in on predatory payday and consumer installment loans which trap borrowers into endless cycles of debt. But it is the consumers who are paying the price for these unfair and irresponsible and predatory financial products through record foreclosures and rising unemployment and taxpayerfinanced bailouts."

President Obama created the proposal and met with Madigan in Washington last week. A vote on the proposal is expected Thursday in the House Financial Services Committee.