WASHINGTON – Republican members of the House Financial Services Committee failed in try after try yesterday to water down or even kill legislation to create a Consumer Financial Protection Agency, with Democratic champions of the new agency determined to bring the bill to a committee vote today, before sending it on to the full House for a vote.
The Democratic majority of the House panel–37 of 70 members--turned back efforts by the Republicans to carve out exemptions for various interest groups and to "sunset" the agency, that is, require it to justify its existence every five years, as they moved to shape the new agency.
"We give the director of the CFPA authority over thousands of businesses, authority without any limitations. That’s a recipe for an agency to grow like topseed," said Spencer Bachus, of Alabama, the senior Republican who is opposed to creation of the new agency.
The panel also rejected a Republican amendment that would have barred the agency from setting prices, rates or fees for financial products or services. Barney Frank, Democratic chairman, argued the measure would prevent the agency from regulating overdraft fees.
Democrats Jackie Speier and Maxine Waters, both of California, also raised objections, saying the amendment would block the agency from cracking down on payday lenders. They plan to offer an amendment that would give the agency the power to impose caps on interest-rates it deems unfair, deceptive or abusive.
Meantime, the new consumer regulator started to take shape.
The agency will oversee such products as mortgages, credit cards, payday loans and terms on savings accounts. It will monitor for compliance with consumer rules now enforced by the Federal Reserve, the Federal Trade Commission and other agencies and write new ones.
Most banks, those under $10 billion, and credit unions, those under $1.5 billion, would be exempt from being examined by the agency but would still have to comply with new rules written by the agency.
Several industries would be exempt from oversight, including retailers, auto dealers, lawyers and accountants. Gift cards would not be monitored by the agency. Lawmakers said the goal was to regulate financial products, not all financial transactions.
The agency would be funded by an estimated $300 million its first year that will come out of the Fed’s budget. No financial institution will pay any more than it currently does for an examination.
