House Committee Supports New Consumer Protection AgencyThe 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.