WASHINGTON – The House Financial Services Committee approved a bill creating a Consumer Financial Products Agency yesterday and sent the major component to what is expected to be a broad regulatory reform package to the full House for a vote.
"We now have a stand-alone consumer protection agency that has very significant powers," said Chairman Barney Frank, D-Mass., of the bill that is expected to be combined with efforts to consolidate financial regulators, create more transparency in financial markets and potentially stiffen oversight of troubled mortgages.
The credit union lobby was unenthusiastic about the bill, even though it would exempt all but 75 of the largest credit unions from being examined by the new agency.
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"Since this proposal was first put forward by the Obama administration, CUNA has acknowledged that consumers need greater protection, especially consumers of unregulated financial products, and that a Consumer Financial Protection Agency could be a way to provide those protections," said CUNA President Dan Mica in a prepared statement. "That said, we do continue to have significant concerns about the impact that elements of this legislation will have on credit unions and their members. We will continue to work with Chairman Frank to address our concerns, specifically with respect to the examination and enforcement of credit unions, as this bill moves toward floor consideration in the coming weeks."
The committee’s vote after the bill was amended to require all federally chartered credit unions and banks to comply with tougher state consumer laws, unless those laws would "significantly interfere" with an institution’s ability to do business. Numerous recent rulings by NCUA and bank regulators allowed federally chartered institutions to ignore state laws on subprime mortgage lending, credit card charges and other issues they ruled were preempted by federal laws or regulations.
President Barack Obama, who had proposed the new agency to Congress, applauded the committee’s vote, which fell mostly along party lines. This step "sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change," Obama said in a statement.
