What Would Obama’s Planned Consumer Financial Protection Agency Do?

Technorati Tags: obama,treasury dept,consumer financial protection

The Treasury Department sent 152 pages of legislation to Capitol Hill on Tuesday that spells out in detail its plan for the creation of a new Consumer Financial Protection Agency. The banking industry is already mobilizing to fight the proposal but Democrats are pushing for it aggressively.

According to the draft legislation, Treasury’s plan would:

• 1) Give the agency broad authority to write rules about services or products including:
  a. Deposit-taking activities
  b. Extending credit and servicing loans (this could include mortgages, credit cards, etc.)
  c. Check-guaranty services
  d. Collecting, providing, or analyzing consumer report information
  e. Providing real estate settlement services, including title insurance
  f. Leasing personal or real property
  g. Investment advisers that aren’t already regulated by the CFTC or SEC
  h. Processing financial data
  i. Sale or issuance of stored value cards
  j. Acting as a money service business
  k. And any other activity the agency defines as a rule, except for most types of insurance, which are exempt.
• 2) Give the agency five board members, four of whom would be appointed by the President and confirmed by the Senate and the fifth would be the head of the regulator overseeing national banks.
• 3) Appropriate money to run the agency while also allowing the agency to collect annual fees or assessments from companies it supervises. The bill would also establish a victim’s relief fund for penalties collected by the agency.
• 4) The agency’s objectives would be to make sure consumers can make informed decisions about financial products and services, protect them from abuse, make sure markets operate fairly and efficiently, and ensure that all consumers have access to financial services.
• 5) Permit the new agency to prohibit or place conditions on mandatory pre-dispute arbitration agreements between consumers and firms such as credit card companies “if doing so is in the public interest and for the protection of consumers.”
• 6) Ensure that any rule adopted by the new agency would new preempt state law “if State law provides greater protection for consumers.”
• 7) Allow state attorneys general would be allowed to bring law suits for violations of new federal rules.
• 8) Allow the new agency to file subpoenas to collect information for the companies they oversee.