Agency Admits Economic Stability and Consumer Protection Not Mutually Exclusive
For those with a basic grasp of (non-political) economics and a keen memory for how massive consumer fraud and non-transparent financial products helped cause the current economic crisis, it’s an obvious proposition: Helping consumers avoid fraud, usury, overly powerful banks and fee-hungry brokers is good for the economy. But a motley coalition that includes, of course, banks and Fed and — until today — the Office of the Comptroller of the Currency has continually suggested that there is an overall economic benefit to allowing massive financial companies to utilize their market power to the detriment of their customers.
Today, the OCC’s deputy comptroller for public affairs Robert Garsson jumped off the train of government officials suggesting that protecting consumers’ rights would be bad for the economy. Acknowledging that the OCC had played a role in the blocking the president’s plan to create a consumer protection agency independent of other government agencies, Garsson acknowledged the stupidity of the idea that an informed, protected consumer base was bad for an economy made up of those consumers.
“It’s unlikely there will be any meaningful conflicts between safety and soundness and consumer protection,” Garsson said. “The potential for conflicts is very rare.”
That’s right, a government official finally acknowledged that protecting consumers from predatory companies or deliberately non-transparent contracts and relationships might be good for the soundness of an economy still recovering from a tailspin caused by fraud, a lack of consumer understanding, non-transparent markets and financial instruments so complex that even traders didn’t understand them.
“It’s hard to say in the abstract what sort of conflicts could arise, though I don’t think there will actually be many instances in which there is a genuine conflict,” he wrote.”But where a conflict does arise, I don’t think that a consumer protection regulator should be allowed to prescribe a standard that reduces the safety and soundness of an institution. And I’m not talking about consumer protection provisions that simply reduce a bank’s profitability — that’s not something I would characterize as conflicting with safety and soundness, and a statutory provision could say so.”
That’s right, someone in the government acknowledged that a bank’s profitability wasn’t the sole standard for safety and soundness of the economy! That is some change to believe in.