About that Consumer Financial Protection Agency …

June 17, 2009

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.


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Washington’s answer is always to create a new agency. Of course they don’t get rid of the old agencies, they just try and bureaucratically tether them together.

This leads to confusion regarding the agency’s primary role and sphere of influence. Policymakers end up assigning responsibilities based on politics, not capability or original mission. Ultimately, when crises arise, its easy to pass the blame, or ignore a situation since it can be assumed that its another agency’s responsibility.

Maybe there is some merit to having a financial version of the DHS, which reports directly to the president, and oversees all other financial agencies. I am assuming this role is currently filled by the Treasury, but it certainly doesn’t seem to be operating that way, or even have the resources or mindset to operate in that manner.

Posted by greg | Report as abusive

putting Clinton in as Fed Chairman is completely r*tarded because we can REALLY trust Bill “I did not have s*x with that woman” Clinton to stay independent of partisan politics and keep the federal reserve a politically neutral entity. It would be like handing the Green’s Bob Brown control of the Reserve Bank…. Seriously Clinton was a major failure in international affairs (he could have whacked Os*ma in 1996 but didn’t; his intervention in Kosovo was probably a mistake; leaving Saddam for Bush was a mistake when there was a legal case for war in 1998 when they kicked out the inspectors in contravention of a 1991 agreement which had an automatic military clause, and he trusted Yassir Arafat, who he now admits lied to him – when he could have pushed the P*lestinians into peace with Isr*el) – I don’t know why anyone would think he is in any position to navigate the worlds biggest economy.

Posted by suzana | Report as abusive