WASHINGTON - The Obama administration on Tuesday sent Congress a detailed plan to create one of the most ambitious parts of the president’s proposed overhaul of financial regulation, a Consumer Financial Protection Agency.
The Treasury Department’s proposal would gather consumer protection powers that now are spread among many bank regulators and place them under a single roof. If it’s enacted, this would be a huge step by government into private banking after a hands-off approach for the past two decades.
President Barack Obama proposed the agency in response to the nation’s deep financial crisis, which is rooted largely in shoddy mortgage-lending practices that exploded in the first half of this decade thanks to regulatory gaps and weak enforcement of consumer protection rules.
The proposed legislation would give the new agency powers to set and enforce standards for things such as mortgage and credit-card disclosure statements. For ordinary Americans, the most important feature is that the agency would have the sole mission of consumer protection. One lesson of the financial crisis is that the several agencies that shared that responsibility made it a lower priority than their other missions.
In a nod to concerns raised by financial institutions, the new agency would be required to weigh beforehand the potential costs and benefits of any actions it might take, and to monitor how those actions worked to ensure that they weren’t proving burdensome to commercial activity.
Banks weren’t happy about the proposal.
“Its costs exceed the benefits,” said Scott Talbott, the senior vice president of government affairs for the Financial Services Roundtable, a lobby for the nation’s …
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Tags: Banks, Barack Obama, benefits, Business, Car, consumer, finance, financial, mortgage
