There’s been so much resistance to the proposed Consumer Financial Protection Agency that Rep. Barney Frank, the chairman of the House Financial Services Committee, has proposed a less powerful version of the agency in an attempt to get it passed. Here’s what’s changed:
- No more requirement that banks offer “plain vanilla” loans for easy comparison shopping.
- There would be a governing panel where banks could appeal rulings they don’t agree with.
- Non-financial companies like retailers, doctors, and auto dealers would be exempt from oversight.
- The agency will have to be funded without imposing any new fees on banks.
Will this be enough to get the bill passed, and if so, will the CFPA still be powerful enough to police the financial industry? The American Bankers Association seems a lot happier with it, which doesn’t sound like a good thing:
Edward Yingling, president of the American Bankers Association, welcomed what he called “significant improvements” in the legislation.
Yingling still isn’t happy with the consumer agency, part of a sweeping overhaul of financial regulation in the wake of Wall Street’s meltdown last year. He notes that the plan still lets states impose stricter consumer regulations if they want to. And he wants traditional bank regulatory agencies to keep their authority to regulate consumer finance.
But Frank wouldn’t budge, saying the FDIC, comptroller of the currency and Federal Reserve had an “abysmal” record on protecting consumers: “They never cared about consumer affairs. … They regard consumer affairs as a kind of nuisance.”
“Plans for consumer shield pared back” [CNN Money]
“Consumer watchdog’s ‘draconian’ powers scaled back” [USA Today]
(Photo: Andrew Ciscel)