Dugan Uneasy About Proposed Consumer Protection Agency

oller of the Currency John C. Dugan has expressed concerns over the proposed Consumer Financial Protection Agency (CFPA). In testimony before the House Financial Services Committee, Dugan supported the concept of the CFPA, but was not enthused on its initial schematics. ‘It makes sense to consolidate all consumer protection rule-writing in a single agency, with the rules applying to all financial providers of a product – both bank and nonbank,’ he said. ‘But we believe the rules must be uniform, and that banking supervisors must have meaningful input into formulating them. Unfortunately, the proposed CFPA falls short on both accounts.’ Dugan added that CFPA runs the risk of cannibalizing the authority of the federal regulatory agencies in charge of monitoring the financial services industry. ‘The CFPA should not take consumer protection examination and enforcement responsibilities away from banking agencies,’ he continued. ‘To the extent the banking agencies have been criticized for consumer protection supervision, the fundamental problem has been with the lack of timely and strong rules – which the CFPA would address – and not the enforcement of those rules. ‘Moreover, moving these banking agency functions to the CFPA would only distract it from its most important and daunting implementation challenge: establishing an effective examination and enforcement regime for the 'shadow banking system' of the tens of thousands of nonbank providers that are currently unregulated or lightly regulated, like the nonbank mortgage brokers and originators that were at the heart of the subprime mortgage problem,’ he added. SOURCE: Office of the Comptroller of the Cur


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