Consumer Financial Protection Agency

The Congressional Research Service (CRS) recently issued a comparative analysis of the Consumer Financial Protection Agency Act as proposed by the Obama Administration and HR 3126, the Consumer Financial Protection Agency Act of 2009, introduced by Rep. Barney Frank.

The Obama proposal, also called the Consumer Financial Protection Agency Act of 2009 (CFPA Act) (pdf, 152pp), is based on a report (pdf, 89pp) that presents five objectives:

• Promote robust supervision and regulation of financial firms
• Establish comprehensive supervision and regulation of financial markets
• Protect consumers and investors from financial abuse
• Improve tools for managing financial crises
• Raise international regulatory standards and improve international cooperation

CRS questions whether the CFPA, as a dedicated agency for consumer protection, would be an improvement: whether it would add a redundant layer of regulation to federal banking statutes; whether it would stifle financial innovation; and whether the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) would retain their consumer protection role in securities and derivatives markets.

Financial Regulatory Reform: Analysis of the Consumer Financial Protection Agency (CFPA) as Proposed by the Obama Administration and H.R. 3126, R40696 (pdf, 14pp/168kB), from Open CRS, July 17, 2009