When the Obama administration formally unveiled its proposal for creating a financial consumer protection agency last week, Scott Talbott of the Financial Services Roundtable, the financial industry’s lobbying arm, expressed concern that the new agency would set not a ceiling but a floor for consumer protection rules. "States are encouraged to go further to provide additional consumer protections, which will create a patchwork of 50 state regimes," he said.
Talbott is spot-on in identifying what the new agency would do, but what’s giving him pause should be embraced by consumers and consumer advocates. Creating a regulatory floor upon which states can build is an absolutely necessary step in the process of reforming financial regulation, and should be done over the objections of the financial industry.
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