jesuitsdidit
23-10-2009, 04:45 PM
A U.S. congressional committee on Thursday endorsed creating a federal financial consumer watchdog, giving the Obama administration a victory...
http://www.reuters.com/article/euRegulatoryNews/idUSN2254102120091022?sp=true
UPDATE 3-US House panel shortens consumer watchdog's leash
Thu Oct 22, 2009 3:45pm EDT
* Scope of proposed agency pared back in committee
* Auto dealers exempted from agency oversight
* Full House vote not expected until November
* Senate outlook for Obama financial reforms unclear (Adds Frank, Warren comment, details on other reforms)
By Kevin Drawbaugh and Rachelle Younglai
WASHINGTON, Oct 22 (Reuters) - A U.S. congressional committee on Thursday endorsed creating a federal financial consumer watchdog, giving the Obama administration a victory, but only after one of its key proposals was pared back.
The House of Representatives Financial Services Committee, in a 39-29 vote after four days of debate, backed legislation to set up the U.S. Consumer Financial Protection Agency, which would regulate mortgages, credit cards and other products.
The agency is a central part of President Barack Obama's sweeping plan to tighten bank and market regulation to try to prevent a repeat of last year's severe financial crisis.
The CFPA bill was expected to come before the full House for a vote next month. Its outlook was unclear in the Senate, which is moving slowly on financial regulation reform.
"The Consumer Financial Protection Agency will prevent predatory lending practices and other abuses and will ensure that consumers get clear information they can understand about financial products like credit cards and mortgages," Obama said in a statement welcoming the committee's vote.
Committee Chairman Barney Frank, who is steering reform in the House, called the panel vote a "major breakthrough."
U.S. businesses and financial services firms lobbied fiercely to kill the bill, arguing that such an agency would impose onerous and duplicative rules as well as crimp innovation.
The bill backed by the panel trimmed back the Obama proposal, exempting many auto dealers, as well as credit, mortgage and title insurers, from CFPA oversight.
But Elizabeth Warren, the top watchdog for the government's $700 billion bailout program and early advocate of the consumer agency, voiced delight the powerful banking lobby was unable to knock down the wider plan.
"When I first came to Washington with the idea of this agency, everyone told me 'the banks always win, quit now because the banks always win.' They didn't win today," Warren told reporters.
The CFPA would strip existing agencies, including the Federal Reserve, of consumer protection duties, and centralize them in an agency solely devoted to handling the job.
Democratic supporters of the agency say it is needed because other agencies have failed to protect consumers from predatory mortgage loans and other sharp practices. Critics said it was an unneeded intrusion into the economy.
"Democrats have passed a bill to create a new government bureaucracy," said Republican Representative Jeb Hensarling, a senior committee member.
Representative Michael Castle was the only Republican on the committee to vote in favor the bill. Two Democrats -- Travis Childers and Walt Minnick -- voted against it.
Frank said the carve out for auto dealers went too far and said he would try to cut it back before the bill moves to a full House vote.
Banks with less than $10 billion in assets -- which is the vast majority of U.S. banks -- and credit unions with less than $1.5 billion in assets won a partial CFPA reprieve.
Under the committee's bill, they would have to follow the agency's rules, but examinations and enforcement could be handled by existing regulatory agencies.
In another change from Obama's proposal, the committee dropped a provision that would have required banks to offer "plain vanilla" products, like 30-year fixed-rate mortgages.
It also softened an Obama provision that would have given state governments wide latitude to write and enforce consumer protection rules that are tougher than the CFPA's.
States still could do that, under the committee's bill, but federal regulators could block state rules if they were found to "significantly interfere" with a national bank's business.
The committee excluded retail transactions involving store credit from CFPA oversight, but included consumer credit reporting agencies under it.
Frank's committee has already passed a bill to regulate the $450 trillion over-the-counter derivatives market. Frank said his panel is expected to finish a securities protection bill next week and will work on a bill giving government a way to unwind large failing financial firms the week after.
(Reporting by Kevin Drawbaugh and Rachelle Younglai; Editing by Andrew Hay)
© Thomson Reuters 2009 All rights reserved
http://www.reuters.com/article/euRegulatoryNews/idUSN2254102120091022?sp=true
UPDATE 3-US House panel shortens consumer watchdog's leash
Thu Oct 22, 2009 3:45pm EDT
* Scope of proposed agency pared back in committee
* Auto dealers exempted from agency oversight
* Full House vote not expected until November
* Senate outlook for Obama financial reforms unclear (Adds Frank, Warren comment, details on other reforms)
By Kevin Drawbaugh and Rachelle Younglai
WASHINGTON, Oct 22 (Reuters) - A U.S. congressional committee on Thursday endorsed creating a federal financial consumer watchdog, giving the Obama administration a victory, but only after one of its key proposals was pared back.
The House of Representatives Financial Services Committee, in a 39-29 vote after four days of debate, backed legislation to set up the U.S. Consumer Financial Protection Agency, which would regulate mortgages, credit cards and other products.
The agency is a central part of President Barack Obama's sweeping plan to tighten bank and market regulation to try to prevent a repeat of last year's severe financial crisis.
The CFPA bill was expected to come before the full House for a vote next month. Its outlook was unclear in the Senate, which is moving slowly on financial regulation reform.
"The Consumer Financial Protection Agency will prevent predatory lending practices and other abuses and will ensure that consumers get clear information they can understand about financial products like credit cards and mortgages," Obama said in a statement welcoming the committee's vote.
Committee Chairman Barney Frank, who is steering reform in the House, called the panel vote a "major breakthrough."
U.S. businesses and financial services firms lobbied fiercely to kill the bill, arguing that such an agency would impose onerous and duplicative rules as well as crimp innovation.
The bill backed by the panel trimmed back the Obama proposal, exempting many auto dealers, as well as credit, mortgage and title insurers, from CFPA oversight.
But Elizabeth Warren, the top watchdog for the government's $700 billion bailout program and early advocate of the consumer agency, voiced delight the powerful banking lobby was unable to knock down the wider plan.
"When I first came to Washington with the idea of this agency, everyone told me 'the banks always win, quit now because the banks always win.' They didn't win today," Warren told reporters.
The CFPA would strip existing agencies, including the Federal Reserve, of consumer protection duties, and centralize them in an agency solely devoted to handling the job.
Democratic supporters of the agency say it is needed because other agencies have failed to protect consumers from predatory mortgage loans and other sharp practices. Critics said it was an unneeded intrusion into the economy.
"Democrats have passed a bill to create a new government bureaucracy," said Republican Representative Jeb Hensarling, a senior committee member.
Representative Michael Castle was the only Republican on the committee to vote in favor the bill. Two Democrats -- Travis Childers and Walt Minnick -- voted against it.
Frank said the carve out for auto dealers went too far and said he would try to cut it back before the bill moves to a full House vote.
Banks with less than $10 billion in assets -- which is the vast majority of U.S. banks -- and credit unions with less than $1.5 billion in assets won a partial CFPA reprieve.
Under the committee's bill, they would have to follow the agency's rules, but examinations and enforcement could be handled by existing regulatory agencies.
In another change from Obama's proposal, the committee dropped a provision that would have required banks to offer "plain vanilla" products, like 30-year fixed-rate mortgages.
It also softened an Obama provision that would have given state governments wide latitude to write and enforce consumer protection rules that are tougher than the CFPA's.
States still could do that, under the committee's bill, but federal regulators could block state rules if they were found to "significantly interfere" with a national bank's business.
The committee excluded retail transactions involving store credit from CFPA oversight, but included consumer credit reporting agencies under it.
Frank's committee has already passed a bill to regulate the $450 trillion over-the-counter derivatives market. Frank said his panel is expected to finish a securities protection bill next week and will work on a bill giving government a way to unwind large failing financial firms the week after.
(Reporting by Kevin Drawbaugh and Rachelle Younglai; Editing by Andrew Hay)
© Thomson Reuters 2009 All rights reserved