The war over consumer financial protection intensifies

A series of bills aimed at watering down the Consumer Financial Protection Bureau will be up for vote this week. What’s a consumer agency that can’t protect?

by Abigail Field, contributor

FORTUNE — An obscure but extremely important political war is being fought in Washington right now over the design and power of the Consumer Financial Protection Bureau, the new agency created in the wake of the financial meltdown to protect consumers and help prevent another financial crisis.

Either the banks will win or the American people will win. It’s impossible for both stakeholders to declare victory.

The fight will only get more interesting if Elizabeth Warren, currently the special adviser in charge of the agency, gets the nod from President Obama run it, as is expected. It’s worth noting that if this agency had existed before the housing bubble, we would have most likely avoided the worst of it and the financial meltdown it triggered. If the pending bills designed to weaken the Consumer Bureau become law, the Bureau would have been powerless to help. Although many factors fed the crisis, the “but-for” cause was the millions of mortgages that never should have been made during final years of the housing bubble. Those mortgages fraudulently pushed home prices into the stratosphere and filled many of the securities that so quickly turned to junk. The Consumer Bureau could have prevented those loans from being made.

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