Nearing the one-year anniversary that President Obama signed the Dodd-Frank Act into law on July 21, 2010, debate over the debut of the controversial Consumer Financial Protection Bureau (CFPB) heats up. Moreover, polling data reveals that the public is not entirely convinced that more regulations will best solve problems in financial markets.
The Dodd-Frank’s CFPB will add additional regulations on the lending practices of banks, mortgage lenders, and credit card companies. As the Wall Street Journal reports, critics argue “that it is a flawed agency that has too much authority over financial firms without enough congressional oversight”. Last fall, President Obama bypassed the Senate confirmation process and appointed Harvard law professor, and long time critic of the financial industry, Elizabeth Warren to help set up the new regulatory bureau. Ms. Warren is convinced of and has argued for years for the need for more regulations to protect consumers from the financial industry. However, her advocacy for more regulations could be problematic if additional regulations also reduce competition in the marketplace, as is often inadvertently the case.
Interestingly, a Rasmussen national telephone survey conducted last fall found that a majority of Americans believe that more competition rather than more regulation is the best way to protect borrowers from unfair lending practices.
What will do more to protect borrowers from unfair lending practices: more competition or more government regulation?
More competition 51%
More government regulation 29%
Not Sure 20%
Moreover, another recent survey conducted this month by Rasmussen found that a majority of all voters believe that increased competition rather than increased government regulation is the best way to hold big businesses accountable. Only 34% believe increased regulation provides a better solution.
What is the best way to hold big businesses accountable—increased competition or increased regulation?
More competition 56%
More government regulation 34%
Not Sure 10%