Today, President Obama announced his proposal for big changes to financial regulation, including a brand new organization, the Consumer Financial Protection Agency. It would be charged with protecting people from misleading or otherwise harmful financial products, including credit cards and mortgages.
Do Americans need such protection? It depends on who you ask. Critics point out that we already have a handful of agencies dedicated to doing just that; proponents say better organization will make such regulation more effective. The Federal Trade Commission, for example, looks out for misleading claims from "free credit report" advertisers, while the FBI typically investigates mortgage fraud.
The American Bankers Association was quick to announce its strong opposition to the creation of the new agency. "It makes little sense to create yet another massive regulatory agency. Bankers are also concerned that there is no clear path for the new agency to examine and enforce the extensive rules on thousands of non-bank providers who are the most likely to be hurting consumers," said ABA president Edward Yingling in a statement sent to reporters. He added his concern that the agency would have excessively broad power to "mandate business practices."
Meanwhile, consumer groups welcomed Obama's announcement. “Too often, captive federal banking regulators have treated consumer protection as less important or even in conflict with their supposed primary mission to ensure the safety and soundness of financial institutions,” says Ed Mierzwinski, consumer program director of U.S. PIRG. Since consumer protection would be the agency's primary goal, Mierzwinski says it would likely be more effective that the current system, where seven different agencies share that responsibility.
What do you think? Do you want a new Consumer Financial Protection Agency?