[StBernard] Committee Votes to Create the Consumer Financial Protection Agency

[Westley Annis]

Financial Services Committee Votes to Create the Consumer Financial
Protection Agency

Committee strengthens regulation to protect consumers from deceptive and
abusive financial products 

 

Washington, DC - Today, the Financial Services Committee approved
legislation that will establish a new, independent federal agency solely
devoted to protecting Americans from unfair and abusive financial products
and services. As called for by President Obama, the Consumer Financial
Protection Agency (CFPA) represents one of the most significant efforts by
Congress to bring about long overdue financial reform and ensure that
Americans are able to take advantage of capitalism's benefits without
falling victim to industry abuses. As last year's crisis demonstrated,
deceptive financial products - such as predatory mortgages and hidden credit
card fees - not only damage the livelihoods of American families, but can
destabilize the entire economy.

The creation of the CFPA will finally put the interests of consumers at the
forefront of the federal government's attention and enforcement efforts. As
outlined in H.R. 3126, the agency's mission will be to promote a fair and
transparent marketplace for financial products and to safeguard the American
public from abusive industry tactics.  In an unprecedented move, the bill
also extends federal supervision to a host of financial industries, such as
payday lenders and mortgage originators, which have long escaped oversight.


A summary of the bill
<http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/F
inancialRegulatoryReform/CFPA_Summary_of_HR_3126.pdf> , which was approved
by a vote of 39-29, can be viewed here
<http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/F
inancialRegulatoryReform/CFPA_Summary_of_HR_3126.pdf> . The committee today
also defeated a large number of Republican amendments intended to prevent or
weaken the CFPA.

 "The Committee vote today is a rifle shot at abusive financial practices,
not a shotgun blast that would hit community banks making an honest living
from fair lending practices. It's no surprise that the lenders with the
worst practices are still fighting tooth and nail against this bill. The
last thing they want is to have to make an honest living," said Rep. Brad
Miller (D-NC).

 

  "Protecting consumers is a must in any new financial regulatory system,
and the Consumer Financial Protection Agency will help make that happen.  I
commend Chairman Frank for his leadership on these issues, and I look
forward to working with him and other Members as we move forward in the
process to improve not only CFPA, but the rest of the financial regulatory
reform package so we can strengthen protections for all consumers, investors
and taxpayers," said Rep. Dennis Moore (D-KS).

"We need a brand new agency with consumer protection as its sole mission.  A
Consumer Financial Protection Agency that looks after the interests of
consumers will also benefit responsible lenders and safeguard the safety and
soundness of our financial system," said Rep. Keith Ellison (D-MN).

 

Currently, consumer protection rule-making and authority is spread across
several different agencies, all of which have failed repeatedly to use the
tools provided by Congress to protect Americans. H.R. 3126 addresses this
inaction by transferring consumer protection authority from the Federal
Reserve and other banking regulators to the CFPA. The consolidation of these
powers at the CFPA also ensures that financial firms will no longer be able
to shop around for the weakest regulator to supervise their products. 

 

In addition, the agency will closely monitor the marketplace for any new
financial products or services that could potentially harm consumers as well
as the larger economy. Once the agency identifies these threats or abuses,
it will have the power to write rules that can regulate, restrict or ban
them. It will also have the power to establish guidelines so that companies
issue clear and fair disclosures to customers on products such as credit
cards and mortgages. 

 

For more information on H.R. 3126, click here
<http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/F
inancialRegulatoryReform/CFPA_Summary_of_HR_3126.pdf> . 

 

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