Consumer Financial Protection Agency
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IMAGE SOURCE: Wikimedia Commons/ Wall Street and Broadway, NYC/ author: Fletcher 6
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A key Congressional panel has voted 39-29 to create a new federal agency that could protect Americans from financial abuses that have contributed to the current crisis.
The House Financial Services Committee approved the creation of the Consumer Financial Protection Agency, which President Obama applauded in a statement.
This step "sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change.”
The agency would monitor consumer financial products such as credit cards and home loans.
The creation of a consumer watchdog agency was a key component of President Obama’s plan to overhaul the sleeping regulatory system that emphasized deregulation loopholes, reckless lending, and practices that led to a near-collapse of the financial markets.
The American Bankers Association will continue to lobby against a separate consumer regulatory body arguing it creates more government.
In a June statement, ABA president Edward L. Yingling said, “There is no shortage of laws designed to protect consumers. Making improvements under the existing regulatory structures – particularly aimed at filling the gaps of regulation and supervision of nonbank financial providers – is likely to be quicker and more successful than a separate consumer regulator,” he said.
The legislation moves to the House floor and eventually to the Senate.
This summer the U.S. Chamber of Commerce launched a $2 million campaign to oppose the consumer agency arguing that consumers won’t be well served if states can each create their own regulations alongside those created by the new agency.
After some pressure on lawmaker the bill includes exemptions for business such as auto dealers. Banks other than the biggest ones will not have to undergo routine agency inspections. The president had wanted standard, government approved financial services to be offered, but no business will be required to do so.
The president chastised the financial industry in his statement.
"They are doing what they always do — descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently those same American consumers bailed them out as a consequence of the bad decisions that they made," he said.
Elizabeth Warren, a Harvard professor who helped shape the new agency said “Everybody told me the banks always win. They didn’t win today.” #