Barack Obama’s Consumer Financial Protection Agency
Barack Obama’s Presidential campaign made many promises about change. Now, he is attempting to deliver on some of these campaign promises by proposing legislation that will create a Consumer Financial Protection Agency (CFPA). In early July, Obama introduced legislation to create the CFPA in the hopes of regulating the financial services industry to protect consumers from predatory and sneaky practices. The CFPA would be in charge of “writing and enforcing consumer protection rules, continuously monitoring the market for risks to consumers and publishing significant findings at least once a year, and streamlining regulatory requirements and making sure financial product disclosures are understandable and helpful.” This organization is being created not only to increase consumer protection in the financial industry, but also to centralize the responsibility in the wake of many regulatory lapses. Obama hopes that the CFPA “will have the power to set standards so that companies compete by offering innovative products that consumers actually want — and actually understand. Those ridiculous contracts with pages of fine print that no one can figure out — those things will be a thing of the past. And enforcement will be the rule, not the exception.” To read more about Obama’s CFPA proposal, click here.
Despite the good intentions of Obama’s CFPA, many claim that it would only make the regulatory process more difficult and thus hurt consumers in the long run. The CFPA could end up harming consumers by suppressing innovation, increasing operating costs, and damaging the integrity of various institutions. In order to ease the concerns of critics, House Financial Services Representative Barney Frank has delayed action on the agency until September to give consumer advocates and the financial industry more time to offer input and respond. To read more about opposition to the CFPA, click here.