A top ranking Republican on the U.S. Senate Banking Committee is speaking out against the formation of a new consumer protection agency that has the potential to the payday loan industry with its new regulations.
Senator Richard Shelby of Alabama recently voiced his displeasure regarding the creation of the Consumer Financial Protection Agency last month, arguing that it could make the nation’’s credit systems unstable by stripping the Federal Reserve of its consumer protection duties, Reuters reported.
The CFPA, as currently drafted, will centralize the consumer protection responsibilities overall consumer credit agencies – including those who offer short term loans such as payday lenders – and govern them with newly implemented laws.
The formation of the CFPA has been a big sticking point between Shelby and Democratic Senate Banking Committee Chairman Chris Dodd, who agree on many other financial issues. Dodd feels that the formation of the agency would help to “make the financial system work,” according to Politico.
While spokesman Jonathan Graffeo said that Shelby did support some type of consumer protections “where appropriate,” he added that Shelby believed that the creation of the CFPA was “neither necessary nor wise” and would only “make the system less safe.”
