September 18, 2020
Press Contact: Fermin Vasquez
Governor Newsom Signs Landmark Bill to Take On Waste & Abuse In The Financial Industry
California Enacts the Strongest Financial Protection Agency in the Country, Leading Where the Trump Administration Has Failed Consumers
Sacramento, CA– While the Trump administration is working overtime to dismantle the Consumer Financial Protection Agency, Governor Newsom signed Assemblymember’s Monique Limon’s AB 1864, creating the strongest consumer financial protection agency of any state in the country. The legislation revamps the current Department of Business Oversight (DBO) and renames it the Department of Financial Protection and Innovation (DFPI), with an expanded budget and additional staff to protect consumers from unlawful, deceptive, and abusive financial practices from PayDay lenders, debt collectors, financial tech industry and student loan scams.
“The pandemic has left millions of people of color vulnerable to predatory lenders, get-out-of-debt scams, and debt collectors. We are seeing the impact of decades of disinvestment in communities, coupled with high unemployment is making people turn to payday lenders that charge exorbitant high interest rates, people are getting harassed by debt collectors trying to seize their relief checks, and new scams are popping up because they know people have nowhere to turn for help,” said Paulina Gonzalez-Brito.
She goes on to say “The Trump administration has gutted the Consumer Financial Protection agency, leaving millions of people to fend for themselves. The newly minted DFPI is essential in protecting consumers and ultimately preventing another massive transfer of wealth like we saw during the 2008 financial crisis when millions of people lost their homes, their businesses, and their life savings to a rogue & criminal financial institution. We can’t let that happen again. Ever.”
A study last year found that under the Trump Administration, the federal Consumer Financial Protection Agency enforcement regulation of the financial sector plunged by 80% from 2015. Not surprisingly, money returned to consumers dropped by 96%.
This new watchdog entity, the DFPI, can be a model for the rest of the nation, as states suffer the consequences of a federal government that is content with returning to the pre Great Recession days of an unregulated financial industry. California must ensure we do not repeat mistakes made during the foreclosure crisis in allowing large corporate landlords, private equity, and other speculators to gobble up distressed properties and fuel another wave of displacement of the state’s working families, communities of color, and small businesses.