One hundred years ago marked the dawn of the modern American consumer financial system, as increasing urbanization and the emergence of a wage economy led the Russell Sage Foundation to call for national efforts to erect a new regulatory framework that would better meet the needs of American workers. Fifty years ago, the National Commission on Consumer Finance (NCCF) was convened in response to the emerging national structure of consumer financial markets and the growing need for a larger federal regulatory presence to address those challenges. Today, as revolutions in technology, the economy, and consumer preferences raise new opportunities and threats for American consumers, it is a propitious time to once again review the framework of consumer financial protection. The Taskforce firmly believes that robust federal enforcement is essential to effective consumer protection. Markets are important and cannot be ignored in the effort to maximize consumer welfare as judged by consumers. But, as recognized in the previous assessments, markets are not enough. Government has a crucial role to play in ensuring that the financial system delivers products and services that are fairly priced, with reasonable terms, and available to all consumers. The Report is organized in two volumes. Volume I provides a historical and economic overview of consumer finance, covers the key principles that form the core of federal consumer financial law and policy, and discusses particular topics that are important to the Bureau’s work. Volume II develops recommendations to improve and strengthen the application of financial laws and regulations. Recommendations are grouped in alphabetically listed topics. In drafting the Report, the Taskforce has been animated by three overarching principles. First, consumer protection policy should be particularly attentive to the consequences for inclusion and access by those communities that have previously been underserved. Toward that end, an essential element of policy should be to facilitate competition, innovation, and consumer choice in the marketplace. Second, consumer financial protection policy should be focused on avoiding harms to consumers rather than attempting to specify how providers should design and market their products. Third, the existing regulatory framework needs modernization to enable it to adapt more nimbly to changes in technology and consumer preferences, respond to new opportunities and threats to consumers, and address future crises, such as the 2008 financial crisis that spawned calls for the Bureau’s creation and the 2020 Coronavirus pandemic. The report is organized around the key areas of analysis of consumer protection: the legal framework of consumer protection, information and disclosure, competition and innovation, inclusion and access, and regulatory modernization.
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