Debate begins on Obama consumer protection plan - Triangle Business Journal:

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That theory is driving PresidentBarack Obama's call for the creatioj of a new office withi n the federal government – a Consumet Financial Protection Agency. It would be dedicated to lookingf out for consumers as they do credit card and other business with financial institutions as part of a set of proposalsannounced today. The proposed agency, part of the most sweepingf financial reform plan since the Great would take on some of the powers currently carries out by other regulators or theFederakl Reserve. But already, that idea is drawing opposition from some seriouxlobbying forces, including the , the and the Americanb Bankers Association.
“The ABA is stronglgy opposed to the proposefd Consumer FinancialProtection Agency. You cannot separatde consumer protection from otherregulatoryy concerns,” ABA President and CEO Ed Yingling said in a Yingling argues that the creation of a Consumer Financial Protection Agency would separate the regulatioj of banks by other agencies, and the regulation of products such as mortgagees and credit cards by the new agency. “Bankes would be subject to conflictinf regulation between safety and soundness and consumefr regulation inmany instances,” he said. That could squelchu banks’ ability to make loans.
The agency, as envisionedx in a draft of the newfinanciap regulations, would have the power to promote cleae and concise language in agreementsd between consumers and lenders; force clearer disclosure of costss and penalties to give consumers a bettefr idea of what kind of deal they’re actually doing with and make it tougher for people to sign expensive credit deals. The agenct would also have the power to make rulezs for the industry and to enforce Obama that the power to lay out new rulezis essential, “so that the bad practicee that led to the home mortgage crisis will be stampedr out.
” The consumer financial protection agency Obama is pushinvg already has the support of key Democrati lawmakers. Sen. Chris Dodd, Chairman of the Banking Committee, of such an agencg last week. The on pending Financia l Product Safety Commission legislation introduced last Apripby Sen. Dick Durbin of Illinois. In its drafft of the new rules, the Obamaa administration acknowledges that a hodgepodge of consume r protections were alreadyin place.
But it makews the case that those regulations failedx inrecent years, contributing to the financial and that a new regulator is “Most critically in the run-up to the financial crisis, mortgage companies and others outside the purviesw of bank regulation exploited that lack of clearf accountability by selling mortgages and other products that were overly complicatedd and unsuited to borrowers’ financial situation. Banks and thriftws followed suit, with disastrous results for consumers and thefinanciao system,” the administration writes in a copy of its proposef rules.
Obama said in a prepared statement that the creationn of such an agency could protecrt both bankersand "This is essential, for this crisis was not just the resul of decisions made by the mightiesrt of financial firms; it was also the result of decisionsz made by ordinary Americans to open credit cards, take out home loans and take on othert financial obligations," Obama said. Beyond the consumer the president also called for the Federa l Reserve to extend its role in overseeingfinancial institutions, expand the ’s ability to brealk up troubled financial institutions, and creat a council of regulators led by the Treasuruy Secretary to fill in gaps in regulation.
Theodore Iacobuzio, an analysft in the banking and payments practiceat TowerGroup, headquartered in Needham, said that as he studied the proposal draft, he saw a broadd role outlined for the Consumer Financial Protection Agency, one that went well beyond regulating mortgage products from for instance. He thinkds the agency could play a role in productas from credit cards to payment cards such as debir cards andprepaid “This new agency would have oversight not only of crediyt but of payments,” he “It does leave a lot of room for them to get very involves in the consumer finance business of all kinds really.
” It’sx part of a process of change in the finance toward a much more risk-averse environment than we’ve seen in the and the government, through Obama’s is accelerating the pace of that “It will change the character of the financia services business,” Iacobuzio said. But bankerds are going to be a tough sell when it comes to the extr a layerof regulation. The Independent Bankersw of America, while praising several of the reformse Obamais proposing, singles out the creation of a Consumer Financiall Protection Agency for opposition.
The ICBA complained in a releasd that such an agency would not have the same viewthat already-existint banking regulators have. Those regulatords already know how to balance bank safety and soundnesse with productsfor consumers. A new agency without regarx to safety and soundness could come up with burdensome regulations that would make it too expensivee for banks to offert otherwise beneficial servicesto