SAN FRANCISCO, January 10th, 2020 – Today Governor Newsom announced a major overhaul of the California Department of Business Oversight in his 2020-2021 budget proposal to better protect consumers in light of the Trump administration’s effort to undermine the Consumer Financial Protection Bureau (CFPB).
Newsom has proposed to create a California state version of the Consumer Financial Protection Bureau – the federal agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama in 2010.
The proposed California Consumer Financial Protection law would overhaul the existing Department of Business Oversight and rename it the Department of Financial Protection and Innovation, or DFPI.
The Department of Business Oversight currently licenses and regulates securities brokers and dealers, investment advisors and payday lenders. The Department of Financial Protection and Innovation would continue doing these functions on top of additional regulatory power and responsibility.
The new law also would give the state oversight of debt collectors; a regulatory function now limited to federal authorities.
Communities of color and working class households often fall victim to cycles of debt due to the use of harmful lending products and a lack of safe banking options, impairing their financial future and ability to build wealth. Debt collectors further strip communities of their wealth and earnings. Increased oversight of debt collectors is critical for the upward mobility of California’s working class and communities of color.
CRC experts made the following comments:
“Trump’s takeover of the CFPB has been a disgrace from the start. I should know. They kicked me off their advisory committee for standing up for everyday people. Kudos to Governor Newsom and his team to allocate resources to strengthen consumer protections. However, the new authority of the proposed department does include an office for innovation. We must remain vigilant that new lending products uphold rigorous lending standards, putting people’s interests above profits. That said, state lawmakers should work with the Governor and frontline communities to make the DFPI a reality” said California Reinvestment Coalition Executive Director Paulina Gonzalez-Brito
“It’s encouraging to see this Governor put money where his mouth is and consider ways to enhance a department that has largely been limited in its reach to enforce its recommendations to protect all Californians. It’s been devastating to witness Trump’s rollbacks of the agency intended to fight the worst actors in our economy. Now communities of color and working class households across California are falling prey to many of the same financial predators that almost sunk the global economy nearly a decade ago. State lawmakers must work with the Governor and advocates leading the charge on the ground to boost the Governor’s proposal and ensure real oversight of scammers happens all day, everyday” said California Reinvestment Coalition National Policy and Communications Director Vijay Das