The Draft Consumer Financial Protection Agency Act of 2009
The Treasury Department today released draft legislation outlining a central pillar of the Obama administration’s financial regulatory overhaul: the creation of the Consumer Financial Protection Agency (CFPA), an independent regulator with broad authority over “any financial product or service” used by consumers. Seeking to clarify the administration’s June 17th white paper on financial regulatory reform, the legislation provides lawmakers and industry leaders with the statutory details regarding the proposed CFPA.
According to the draft language, in order to continuously monitor consumer risks, the agency—composed of a five-member board led by a presidentially-appointed director subject to Senate confirmation—would collect information related to loans, products, and services from both banks and non-banks. Additionally, consumer financial regulations that are currently divided among several agencies—the Federal Reserve, FDIC, Office of Comptroller of the Currency, Office of Thrift Supervision, Federal Trade Commission, and National Credit Union Administration—will be consolidated within the CFPA. The legislation would have these regulators transfer functions, rules, and employees to the new CFPA within six to eighteen months following enactment. The agency must research, analyze, and report on consumer awareness and understanding of financial products, related disclosure statements, related risks and benefits, and consumer behavior related to such products. The agency would also collect and track consumer complaints and create a new, integrated disclosure form for mortgage transactions, unless the Department of Housing and Urban Development and the Fed can achieve the same goal prior to the transfer of such responsibilities to the CFPA. There are also provisions related to civil penalties and enforcement authority.
The release of the legislative draft of the Consumer Financial Protection Agency Act of 2009 was welcomed by House Financial Services Committee Chairman Barney Frank (D-MA), who said creating the agency was one of the committee’s highest priorities. Leaving wiggle room for the inevitable changes he and his colleagues will make, Frank added,
“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. And with their text in hand we can now proceed to draft and approve a bill in committee before the August recess.”
Frank’s Senate counterpart, Banking Committee Chairman Chris Dodd (D-CT), also praised the administration and said the CFPA is “key to creating the foundations for a stronger economy.”
The draft legislation reaches into and amends several existing statutes including:
- Consumer Leasing Act of 1976
- Electronic Funds Transfer Act
- Equal Credit Opportunity Act
- Expedited Funds Availability Act
- Fair Credit Billing Act
- Fair and Accurate Credit Transactions Act
- Federal Deposit Insurance Act
- Federal Reserve Act
- Federal Credit Union Act
- International Banking Act of 1978
- Fair Debt Collection Practices Act
- Gramm-Leach-Bliley Act
- Home Mortgage Disclosure Act
- Home Ownership and Equity Protection Act of 1994
- Real Estate Settlement Procedures Act
- Truth in Lending Act; Right to Financial Privacy Act of 1974
- Secure and Fair Enforcement for Mortgage Licensing Act of 2008
- Farm Credit Act
- Truth in Savings Act
Consumer Financial Protection Agency Act of 2009 - White House Draft Bill (PDF)
i dont really understand the point of this legislation at all. it seems like nother way to contrl the economy that is already horrifically bad... so can someone explain this to me plz