California expanding financial protections after federal rollbacks

Nation/world
California Governor Gavin Newsom speaks to the press in the spin room at Loyola Marymount University in Los Angeles on Dec. 19, 2019. (AGUSTIN PAULLIER/AFP via Getty Images)

California Governor Gavin Newsom speaks to the press in the spin room at Loyola Marymount University in Los Angeles on Dec. 19, 2019. (AGUSTIN PAULLIER/AFP via Getty Images)

California is creating what supporters call its own nation-leading, state-level version of the federal Consumer Financial Protection Bureau after critics said the Trump administration significantly weakened national protections.

The legislation Gov. Gavin Newsom signed into law Friday changes the existing Department of Business Oversight into the Department of Financial Protection and Innovation.

“While the federal government is getting out of the financial protection business, California is leaning into it,” Newsom said in a statement. “It’s at this moment especially – when so many Californians are strapped for cash and struggling to pay their bills – that families are likely to fall victim to predatory and abusive financial products. These bills ensure that financial predators are subjected to alert oversight and agile enforcement.”

The current department regulates a significant part of the financial services industry, including banks and credit unions.

But the expanded version will add oversight authority over debt collectors, debt settlement, credit repair and check cashing services, consumer credit reporting, retail sales financing and rent-to-own contracts.

“The law also expands the state’s power to target unfair, deceptive and abusive acts and practices by financial service providers – such as debt collectors and emerging financial technology products,” Newsom’s office said in a statement.

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