New US consumer agency won’t cause bank fee hikes

July 14, 2009

   WASHINGTON, July 13 (Reuters) – Banks will not have to pay higher supervisory fees if the Obama administration’s proposed new Consumer Financial Protection Agency gets off the ground and they will not have to seek the regulator’s pre-approval for “plain-vanilla” products, an administration official said on Monday.
   The official told Reuters that fees for consumer compliance functions paid to existing financial regulators will be diverted to the new agency as it assumes those duties. The idea is to keep the fees unchanged for banks while keeping the new regulator adequately funded.
   In legislation proposed by the Obama administration, the new agency would usurp the consumer protection functions from several existing financial regulators, including the Federal Reserve, and the Office of the Comptroller of the currency.
   Along with those duties, it would take personnel and other resources from the existing agencies. Part of the funding would come from new appropriations of taxpayer funds.
   The consumer agency, however, would not take any resources away from the U.S. Securities and Exchange Commission because it would not cover investment products. Instead, the administration has proposed a separate strengthening of the SEC’s powers to protect consumers.
   The official, who declined to speak on the record about the administration’s internal policy discussions, also said the new agency, in the administration’s view, would not be in the business of approving financial products for sale to consumers.
   Rather, the agency would take a more nuanced approach, focusing on setting standards for financial professionals’ practices and behavior to ensure they met obligations to their customers. For example, mortgage brokers would have a duty to make sure that a customer could afford a particular loan, and would have a duty to recommend products that best meet their customers’ needs.
   U.S. House of Representatives Financial Services Committee Chairman Barney Frank is leading an effort in Congress to draft its own version of financial reform legislation. Frank, a Massachusetts Democrat, is planning to move a bill from committee creating the new consumer agency by early August. (Reporting by David Lawder and Patrick Rucker; editing by Carol Bishopric) ((; +1 202 898 8395; Reuters Messaging: Keywords: FINANCIAL/CONSUMER 
Tuesday, 14 July 2009 02:17:26RTRS [nN13287049] {C}ENDS

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