Secretary Mnuchin's Challenge: Rethink Consumer Finance

Our nation's consumer finance laws, enacted nearly 50 years ago, are outdated. Reams of disclosures go unread and billions are spent by banks to comply with hypertechnical regulations. Perhaps more worrisome, the silent premise underlying many of these laws is that the key to assuring consumer financial health is making consumer debt more widely available and easier to obtain. This flawed premise played a large role in bringing our economy to its knees nine years ago.

In President Trump’s Feb. 3 executive order spelling out principles to guide the administration’s financial regulatory policy, the first “core principle” is: “Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth." Under the executive order, Treasury Secretary Steven Mnuchin is instructed to identify any laws that inhibit implementation of the core principles.

A prime candidate inhibiting implementation of the first core principle is the patchwork of outmoded consumer laws. They may have been the best that could be put in place at the time, but they are woefully out of step with the needs of consumers today. Identifying these laws as impediments to progress, however, is only a first step. To replace these laws with provisions more useful to 21st-century consumers, Secretary Mnuchin should consider creating a blue-ribbon Consumer Finance Advisory Committee.