WASHINGTON – A top Treasury official tried yesterday to dissuade credit unions from their opposition to the Obama administration’s proposal for a consumer financial protection agency, saying heavily regulated credit unions and banks ought to benefit by the proposed agency because it would put them on equal competitive grounds with non-banks and other lightly regulated financial services providers.
"Our proposal," Michael Barr, the Treasury’s assistant secretary for financial institutions, said during CUNA’s Government Affairs Conference, "will help strengthen the bank and credit union system, not weaken it."
The proposed consumer agency, said Barr, would also benefit credit unions by measuring their products and service up against banks and other competitors. "Credit unions will win in a competitive environment for fair, transparent pricing for consumers."
Barr’s remarks come as the House-passed financial services bill, which has a provision to create a consumer protection agency, is being considered by the Senate Banking Committee, where doubt exists about the survival of the consumer agency. Republicans oppose creating a stand-alone agency, with some asserting that existing regulatory agencies can do the job adequately.
But Barr said those agencies have proven themselves inadequate to the task of protecting consumers in the past, most glaringly in the case of subprime and other exotic mortgages. "Prudential regulators have too often delayed action against unfair consumer practices until the threat to bank earnings becomes palpable," he said. "Delays in addressing failures of consumer markets is deeply damaging to banks and credit unions, not just consumers."
