The formation of the Consumer Financial Protection Agency is an “absurd” notion that does nothing more than add a “new bureaucracy” that will limit consumer credit agencies” innovation, according to a recent editorial in a Utah newspaper.
The editorial published in the Deseret News on Monday argued that the Consumer Financial Protection Agency, which was passed last month by the House Financial Services Committee and will have the power to regulate all consumer credit agencies such as payday lenders, would harm the industry by removing risks that stifle new ideas.
While it argued that the CFPA would not harm some aspects of the industry that are firmly rooted in the economy, it would make it harder for companies to introduce new ideas.
“If a bank were to offer something new that no one had thought of previously, what then? The new agency would have the power to set rules, ban products and hand out penalties,” the paper argues. “As its charge would be to minimize risks, the natural inclination would be to curb innovative thinking.”
The formation of the CFPA has also come under fire from those who issue payday loans because of the potential implementation of rate caps on short term lenders that would limit their profitability and send them out of business, hurting the consumers who are depending on the loans.
