CFPA in the SenateDecember 28, 2009 - by Donny Shaw
The value in the new Consumer Financial Protection Agency (CFPA) that some in Congress are proposing is that, unlike other regulators that consider the safety and soundness of financial products for the markets, the CFPA would try to make sure products are safe and sound for consumers. That is what is really new and unique about it.
The House already approved the CFPA. The Senate is nearing a bipartisan agreement on the need for a CFPA, but the big sticking point is whether it will be an independent agency like it is in the House bill (H.R.4173) or if it will be rolled in with another regulatory agency. According to the Washington Post, Sen. Richard Shelby [R, AL], the top Republican on the Banking Committee “believes that keeping consumers safe and banks healthy should be handled by the same agency so that the two priorities remain in balance.”
The questions then are: if they agencies are kept separate, will having different sets of protections from the market and consumer safety sides create an environment that the financial industry and their allies in Congress can accept? And, does the CFPA necessarily lose its unique new value if it is forced to work together with regulators that are looking out for financial markets?