Elizabeth Warren, the Harvard law professor who was appointed to head the Congressional Oversight Panel on the banking bailout last year, explains it this way: “We don’t eat tainted meat and we don’t drink adulterated milk because we have fairly good regulation. Financial products are no different. Free markets are not well supported when consumers are at risk for injury.”
With Professor Warren and more than 200 other organizations, Iowa PIRG is calling for the creation of a Consumer Financial Protection Agency.
It’s painfully clear that Wall Street placed excessively risky bets that they could not cover, and paid executive bonuses on profits that did not exist. Worse, taxpayers, small investors, homeowners and our economy paid the price, because at the core of the crisis was a failure to adequately regulate financial products.
In both June and July, Ed Mierzwinski, the director of our consumer program, testified before Congress in favor of the new agency, which would have the power to regulate all credit card and consumer loan products, no matter where purchased, and to check predatory financial products, such as payday loans and risky mortgages.
