The Washington Post reports that thanks to legislative compromise, banks and mortgage brokers may be the only financial institutions regulated by the proposed federal Consumer Financial Protection Agency–leaving entities that loan money but don’t hold bank charters, such as auto dealers, pawn shops, and payday lenders, unregulated by the industry. Now an unholy alliance of banking industry groups and consumer advocates are fighting the proposal, each for their own reasons.
Senate Republicans argue that financial institutions that had no role in creating the economic meltdown do not need special oversight. Representatives of the financial institutions that are about to be more intensely regulated disagree.
“These non-banks are making the same kinds of loans, they’re dealing with consumers with a lot of the same types of products,” said Steve Verdier of the Independent Community Bankers of America. “That proposal to cover the banks and the mortgage banks is fighting the last war. We don’t know where the next problem is going to be, and if we leave a loophole open, we know it’s going to happen somewhere else and the consumers are not going to be protected.”
In other news, in 2011, Bank of America will re-incorporate as a pawn shop.