WASHINGTON — A new draft of a House bill creating the Consumer Financial Protection Agency would give a voice to credit unions by dedicating a spot on the agency's oversight panel for a representative from NCUA, as well as the banking agencies, the Federal Trade Commission, the Department of Housing and Urban Development and state regulators.
The proposed agency, which would have jurisdiction over the financial products and services issued by banks and credit unions, would be administered by a single director who would be advised by the oversight board, according to a new draft of the bill being circulated and obtained by Credit Union Journal.
Creation of the new agency is a priority of President Obama, who asserts that the sale of complicated products, like subprime and interest-only mortgages helped cause the current financial crisis. Credit unions have been lobbying Congress to be left out the purview of the new agency, but those efforts are not expected to be successful.
The new agency would be funded by the Federal Reserve at a level that reflects amounts the banking agencies currently pay for consumer compliance.
Under the latest proposal, depository institutions will have simultaneous federal safety and soundness and consumer compliance examinations, unless they request exams at different times. Whatever they choose, the banking and credit union agencies and consumer agency will have to coordinate and consult each other on the timing, scope and results of exams to ensure a minimum regulatory burden.
Depository institutions that receive contradictory or conflicting supervisory determinations or directives from agency will be able to appeal the decisions to a disinterested governing panel and receive a quick and definitive answer.
The latest proposal says financial institutions will not be required to offer plain vanilla products and services, as was earlier proposed, and agency will not have authority to approve or change business plans.
The consumer agency will not be able to mandate "reasonableness" standards that would place financial institutions in the position of having to assess whether consumers understand the products and services they are being offered. Instead, agency will be authorized to improve the current disclosures with an emphasis on clarity, simplicity, conciseness, and reduction of regulatory burden.
