Andy Busch of BMO Capital Markets doesn’t like the look of it one bit:
Lastly, the plan wants to create an new regulatory body to oversee consumer financial products. The Consumer Financial Protection Agency or CFPA would have broad powers to regulate all aspects of the sector from mortgages to credit cards to bank accounts. While President Obama has expressed his desire that this new agency not regulate interest rates on credit cards, I would imagine it would be difficult to control once it gets into operation. Mortgages, home equity loans, debit cards, and credit cards would all come under some committee in Congress and have sweeping authority to set rules.
Given the massive disruptions that have occurred in the financial markets, the urge is to create an entirely new structure instead of fixing/reforming what is already in place. With every new agency that is created, Congress reaches deeper and deeper in the functioning of the private sector. The CFPA will be a massive new agency that will impact everyone in the United States in some form. Providing this much power to one agency is truly frightening as they will get to set the rules and pick the winners/losers for the financial sector.