CFPA Independece Hits a Wall in the Banking CommitteeJanuary 12, 2010 - by Donny Shaw
The Democrats’ chief consumer protection plan in the wake of the financial crisis, the Consumer Financial Protection Agency, is running into some serious opposition in the Senate Banking Committee.
“In a potential setback for the White House, committee members were said to be talking about reducing the proposed agency’s status, possibly making it instead a division of a new systemic risk regulator or a new super-cop for banks,” Reuters reports. “Stripped of independent agency status, the watchdog would be less formidable than President Barack Obama’s proposal for a new U.S. Consumer Financial Protection Agency, or CFPA.”
Supporters of the CFPA say it needs to be an independent agency to be effective. What the CFPA would offer that is unique is that, unlike the other regulatory agencies that consider the safety and soundness of financial products for financial markets, the CFPA would consider the safety and soundness of financial products for consumers. Rolling it in with the other regulators could make consumer financial protections subservient to their goals of protecting the markets. Sort of like how the Federal Reserve treats their supposed mission to conduct monetary policy “in pursuit of maximum employment.”