At a hearing to consider Republican proposals to “preserve consumer choice” today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, expressed skepticism with the majority’s assertion that these proposals would accomplish anything for our nation’s consumers.
Waters pointed out the irony of the hearing’s theme, noting that most proposals to be discussed are harmful to consumers and actually weaken Wall Street watchdogs like the Consumer Financial Protection Bureau. Waters expressed concern that the measures instead would invite a return to the predatory and unscrupulous practices at the root of the recent financial crisis.
Her full remarks follow:
“Thank you, Mr. Chairman.
Today, we gather to supposedly discuss “preserving consumer choice.” And while the principle itself is an important one, I’m highly skeptical that any of the issues or solutions we will consider today can be described as a serious effort to do so.
History tells us that opponents to virtually every effort to sensibly correct private sector failures have cried “wolf” in opposition to reform, saying that the regulation would end up hurting the very people it tries to help by removing their “choices.” It’s a talking point that has existed for as long as this government has tried to protect consumers and the broader economy.
For example, in 1934 New York Stock Exchange President Richard Whitney opposed the creation of the Securities and Exchange Commission, arguing that it would destroy the markets and businesses Congress sought to protect. And as recently as March 2007– just months before the economic collapse – representatives of industry and the Bush Administration argued in front of this very Committee that reforms to the toxic subprime market would harm access to credit for first time homebuyers.
Over time, these regulations – like those that prohibit child labor, mandate seat belts and protect consumers from poor quality food, drugs, and toxins in our environment, among others – have shown that markets and industries function better when consumers know that products meet basic standards. And that means protecting consumers from unsafe and unsound financial products, no matter how profitable they are to lenders, or how cheaply they can be offered to borrowers.
The irony is that by weakening regulations and consumer protections put in place after the Great Recession, this Committee would affect choice and financial independence – but in the wrong way. It would invite a return to a recent time when hardworking Americans were choosing whether to pay for medication – or their mortgage. And when they were choosing between taking their family to a homeless shelter – or spending one more night in the car.
A free market system, with ample consumer choice, only works when businesses compete on cost and quality – not on how much they can cut corners or bend the rules.
That’s true whether we’re talking about faulty, exploding toasters – or faulty, exploding mortgages.