How agency will protect consumers
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TEXT OF INTERVIEW
Kai Ryssdal: The other big element of the president’s plan is a new office specifically to protect consumers. The — the Consumer Financial Protection Agency — CFPA it’s called. To help us figure out how that office might work, we’ve got Marketplace’s Jeremy Hobson on the consumer protection desk in New York today. Hey Jeremy.
JEREMY HOBSON: Hi Kai.
Ryssdal: On the theory that this thing is going to look at least something like the White House’s proposal once Congress gets done with it. What is this agency going to regulate exactly?
HOBSON: Well mortgages for a start, and these are the sub-prime, adjustable-rate mortgages, credit cards, car loans, pay-day loans. Any consumer financial product that isn’t already regulated by the FCC, which means not investments. They’re not going to tell you which stocks to buy.
Ryssdal: All right then, Jeremy, let’s say I go out to get a car loan or a mortgage, is all the documentation with that loan going to have nutritional warning labels on the back for instance that are going to let me know default rates and all that kinda good stuff.
HOBSON: Well, they may, but really the work that has been done by this agency will have been done by the time you go down to get your car loan. So the loans available to you are going to be the simpler loans, those will be upfront. There may be loans that were more complicated and may trap you in some way that have been held away from the marketplace because they’re deemed unsafe.
Ryssdal: Saving me I suppose from myself, then?
HOBSON: Right. Just the way the FDA saves you from yourself by not allowing certain products that are unsafe to get on to the shelves. Just the way that the Consumer Product Safety Commission won’t allow you to buy a buggy board that is covered in lead paint. This is going to keep you from financial products that may be harmful to you, that may leave you out on the street or in bankruptcy court.
Ryssdal: But I’m a grown up. Don’t I get to make my own decisions?
HOBSON: Well, that’s right. This is going to affect people that are savvy consumers who might want to be able to make their own decisions. But I guess the government has decided that it’s better to err on the safe side, rather than allowing people the kind of choice that they have right now.
Ryssdal: What if something bad does happen with one of these newly regulated products? And I find myself in a mortgage that’s bad for me, or a car loan, or a student loan that’s bad. Do I have any recourse?
HOBSON: Well, you do if the lender did something fraudulent. Like, let’s say that they used a phony pay stub for you to try to get you into a mortgage that you couldn’t afford. But if they did everything they were supposed to do, then you’re holding the bag.
Ryssdal: You know, Jeremy, yesterday the president made a big point about getting rid of all the fine print that none us can or have the time to read. Is that really going to happen?
HOBSON: Well, one administration official I spoke to today said there will still be fine print. But it’ll be the kind of thing like on the Internet when you click the box that says, “I agree to the terms and conditions,” and you click “OK.” It will actually be OK, you won’t have to worry that something in the fine print will trap you down the road.
Ryssdal: Jeremy Hobson in New York for us. Thanks, Jeremy.
HOBSON: Thank you, Kai.
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