The banking industry has voiced a range of objections to the proposed Consumer Financial Products Agency, the new consumer protection regulator the Obama administration wants to establish. Even regulators say putting consumer protection in a separate agency would be a step in the wrong direction. But an analysis of fair lending law enforcement among bank regulators by the General Accountability Office concludes the present system isn’t working well at all. The GAO’s criticism of the current regulatory structure is explicit, but it’s worth pondering whether there’s implicit support for something like the CFPA woven into the report as well.

The GAO blames the “fragmented U.S. financial regulatory system” for deficiencies in the enforcement of fair lending laws and the analysis of data collected under the Home Mortgage Disclosure Act.

“Each regulator uses a different approach to analyze HMDA data to identify outliers and examination documentation varies,” the report says. “Moreover, since 2005, the Office of Thrift Supervision, the Federal Reserve, and Federal Deposit Insurance Corp. have referred more than 100 lenders to Department of Justice for further investigations of potential fair lending violations, as required by the Equal Credit Opportunity Act, while the Office of the Comptroller of the Currency made one referral and National Credit Union Administration none.”

So the bank regulators aren’t all on the same page about what to do with HMDA data and the banks that show up as outliers in it. But on top of that, non-bank lenders’ fair lending law violations are harder to spot, the report says. 

The first fact supports consolidation for bank regulators, while the second supports the inclusion of non-bank lenders in the same regulatory regime. If it looks like an endorsement of the idea for a consumer protection agency and smells like an endorsement of the idea for a consumer protection agency, then perhaps it is an endorsement of the idea for a consumer protection agency. And one has to wonder about the timing of the release of this report. HMDA data hasn’t come out this year yet—the release is expected out in early September—but negotiations over the CFPA are well underway.