From the Wall Street Journal (7/1/09)
By Michael R. Crittenden and Jane J. Kim
WASHINGTON — The Obama administration’s proposed consumer-protection agency would have broad oversight for a range of products, beefing up the government’s regulation of credit cards, mortgages and gift cards, as well as expanding its authority over financial firms.
Draft legislation unveiled Tuesday by the Treasury Department would for the first time make a single entity, the Consumer Financial Protection Agency, responsible for writing and enforcing rules across a range of financial products used by consumers.
“This agency will have only one mission — to protect consumers,” Treasury Secretary Timothy Geithner said.
Securities products overseen by the Securities and Exchange Commission and most of the insurance industry wouldn’t fall under the new agency’s oversight, a Treasury official said. But the agency would have subpoena power and would be funded in part by the financial-services industry.
The Treasury and White House plan to work with Democratic leaders in Congress to try to move the legislation quickly.
The measure is expected to draw opposition from the financial-services and business communities, which argue that the new agency would stifle product innovation and prevent firms from offering tailored products to customers.
“Basically, the government is deciding what every bank in every circumstance should offer,” said Ed Yingling, president and chief executive of the American Bankers Association.
The proposed new agency is part of the Obama administration’s efforts to revamp regulation of the U.S. financial system.
The new agency’s reach would allow it to streamline federal mortgage-disclosure rules, and enforce recently enacted credit-card rules, Mr. Barr said. It could also potentially write rules to require banks to get permission from customers before enrolling them in costly overdraft plans.