House Committee Supports New Consumer Protection Agency

The House Financial Services Committee voted on Thursday to back the creation of the Consumer Financial Protection Agency (CFPA). The vote was 39 to 20 in support of the proposed agency, which would be able to wield new rules on many financial products including subprime mortgages and payday loans.

The federal agency would help protect consumers from predatory financial products, such as subprime mortgages and payday loans that often come with extremely high interest rates. Speaking on the passage of the House bill HR 3136, the Consumer Financial Protection Agency Act of 2009, Treasury Secretary Timothy Geithner says, "This bill will create one agency focused on one simple mission--protecting consumers. While there is more work ahead, today we are much closer to putting in place strict new rules of the road for the financial industry."

The focal point of the administration's proposed reworking of financial regulations, the CFPA is already meeting resistance from Republicans, banking interests and industry associations.

The agency would be given the ability to write strong consumer protection rules for a long list of financial products around loans or credit, and it would have the power to stop or negate those business practices it saw as unfair, deceptive or abusive. The CFPA would have examination rights on banks and other financial service companies and the teeth to back up findings with penalties for violations.

The legislation has garnered strong support from Democrats and consumer and public interest groups. They have pointed the finger of blame to banking regulators for not better protecting consumers as the financial crisis of 2008 neared.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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