White House Sends Consumer Protection Agency Legislation To Capitol Hill

ama administration has sent to Capitol Hill [link=http://financialstability.gov/docs/CFPA-Act.pdf][u]legislation[/u][/link] that defines the scope of the president's proposed Consumer Financial Protection Agency. Democratic lawmakers are expected to try to move the legislation quickly, with Massachusetts Rep. Barney Frank, who heads the House Financial Services Committee, calling the agency's creation one of his top priorities. He intends to drive the bill through the House before the August recess. ‘While the committee will, of course, exercise its own judgment on the specifics – and we have already had a thorough hearing on the matter – it is helpful to have the administration's proposals as well, because I believe there is a great deal of common ground between us," Frank says. As outlined in the administration's legislation, the agency would consist of five board members, four of whom would be appointed by the president (with the Senate's consent). The fifth board member would be the head of the regulator overseeing national banks. The agency's sole mission would be to protect consumers, Treasury Secretary Timothy Geithner says. It would be a broad, consolidated agency that governs services and products offered by banks and nonbanks alike. To enable the agency to stay on top of areas of high growth, the agency would have the power to gather information from any lender or any provider of financial products or services. Additionally, the agency would be tasked with monitoring consumer awareness and understanding of the risks involved with various products. It would also have the ability to subpoena those under its regulation. Rules created by the agency would act as a floor rather than a ceiling, leaving states with the authority to build upon them. States' power to enforce rules would be preserved. The legislation makes clear that the agency's purview would not extend to companies or services currently regulated by the Securities and Exchange Commission. According to various media reports, the agency would not have oversight of the insurance industry. The administration's legislation also indicates that the agency would be allowed to collect annual fees or assessments from the companies it covers. One of the agency's goals pertaining to the mortgage industry would be to create more uniform mortgage disclosures, which would combine the disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act. SOURCES: Office of Rep. Barney Frank, FinancialStabil


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