Doom and gloom warnings from U.S. banks that a proposed Consumer Financial Protection Agency would raise borrowing costs for consumers and restrict access to credit for small businesses haven’t played out in Canada, which has had a similar agency since 2001.
Congress is debating legislation, proposed by the Obama administration and now before the U.S. House of Representatives, to create an independent agency whose sole mission would be to watch out for the consumer who uses credit cards, takes out a mortgage or borrows money.
The call for such a panel comes out of the financial crisis, triggered in part by weak loan standards and predatory lending. Republicans, backed by the U.S. Chamber of Commerce and bank lobbyists, warn that such an agency would bring punishing costs to consumers and small businesses and could regulate all forms of credit, even tabs at the bar or butcher shop.
Canada’s experience suggests otherwise. Read more.