Creation of the Consumer Financial Protection Agency (CFPA) will help protect consumers from the kinds
of practices, products, and abuses that were contributing causes to the Great Recession. The CFPA will be an unnecessary regulatory agency that will create regulatory confusion, increase costs, and thus reduce availability of financial products to consumers and harm innovation. (Choose one.)
Whatever your bias, the proposed legislation creating the CFPA approved on October 22, 2009 by the House
Financial Services Committee will create a powerful agency with wide-ranging jurisdiction. The CFPA will
assume the “consumer financial protection functions” (and many of the related personnel, depending on the agency)
of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Comptroller o the Currency, the Office
of Thrift Supervision, the National Credit Union Administration, the Office of the Secretary of Housing and Urban Development, and the Federal Trade Commission.The assumed consumer financial protection functions include “research, rulemaking, issuance of orders or guidance, supervision, examination, and enforcement activities, powers, and duties relating to the provision of consumer financial products or services, including the authority to assess
and collect fees for those purposes.” Functions relating to an agency’s responsibilities under the Community
Reinvestment Act of 1977 are not transferred to the CFPA under the proposed legislation.
This article will describe the CFPA and its powers as proposed in the version of H.R. 3126 approved in the House Committee on Financial Services, noting areas that may change as the bill moves further in the legislative process,
with the caveat that the legislative process is essentially unpredictable from the outside (or the inside for that matter).
At approximately 291 pages, the proposed legislation contains many details that areimportant to help understand the implications of the CFPA, and although some readers may not want that much detail, this article attempts to describe most of the relevant provisions of the proposed legislation. The intent is captured in the title of the article: to describe
what will be new and what will be the same if the CFPA is created as proposed.
More