Washington, D.C. – Stephen Hall, Legal Director and Securities Specialist for Better Markets, issued the following statement on the release of a blog debunking three prominent de-regulatory myths in financial regulation:
As the Biden administration installs new leadership at the regulatory agencies, now is a good time to reflect on some of the most egregious mistakes of the prior administration in the area of financial regulation—in short, to remember what not to do when it comes to protecting investors and consumers in our financial markets. Part of that exercise is piercing through the myths advanced again and again by the regulated industry and its allies in policymaking positions to justify de-regulation and weak regulation.
That’s what we’ve done in our blog released today, which refutes three fictions that resurged under the Trump administration, particularly at the Consumer Financial Protection Bureau (“CFPB”). In reality, and contrary to some of the financial industry’s favorite talking points, 1) regulation protects consumers without depriving them of access to credit; 2) technology poses serious risks as well as benefits in finance and it must be accompanied by strong guardrails to ensure that it doesn’t upend markets and harm investors; and 3) state regulation has a vital role to play in consumer protection and it should not be subject to sweeping preemption.
We all witnessed the damage that such anti-regulatory mythology can inflict. In its first five years, the CFPB served as one of the most effective consumer protection agencies in modern history, issuing strong rules, vigorously enforcing the law, and providing over $11 billion in relief to everyday Americans ripped off by financial firms. Yet beginning in 2017, under Trump’s appointed leadership, it retreated from its role as a consumer champion and began rolling back important rules, gutting its enforcement program, and downsizing its personnel and budget.
“Debunking myths about regulation is not merely an intellectual exercise. Policymakers guided by these theories cause direct, real-world harm to vulnerable consumers by repealing important protections, creating weak new rules that cater to industry, and undermining enforcement programs. We must therefore constantly expose and oppose these false narratives about the role of financial regulation, and we urge the new leaders at the regulatory agencies to reject them as they revitalize consumer and investor protection.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.