In the midst of the healthcare reform battle, another war is raging between President Barack Obama and Congressional Democrats. Consumer finance took center stage in early July with the Consumer Financial Protection Agency Act of 2009, a scaled-back version of Obama’s previous proposal.
The House Financial Services Committee proposal is structured very similarly, with a few key differences. Like Obama’s proposal, it will grant the new CFPA power to create and monitor regulations for products offered by the financial industry. Unlike Obama’s proposal, congress proposes to leave enforcement of the Community Reinvestment Act in the hands of offices like the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS), as opposed to the newly formed CFPA. Furthermore, congress does not propose a merger of OTS and OCC into a new regulatory agency called the National Bank Supervisory, as Obama proposed.
The congressional CFPA proposal is not without some internal squabbling among Democrats. Those serving on the House Energy and Commerce Committee protest that the Federal Trade Commission, which falls under that committee’s oversight, should retain regulatory power over non-bank financial products. Losing control over mortgage brokers and finance companies will significantly restrict the role of the FTC and thus the Energy and Commerce Committee, argued former committee Chairman Frank Dingell (D-MI).
Supporters of CFPA counter-argued that one agency with one mission to oversee the financial industry will repair some of the past damage done by the FTC’s historic lack of oversight. The bill, HR 3126, is currently under review by the committees of finance and energy and commerce.
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