A proposal of the Obama administration to create an independent Consumer Financial Protection Agency is stalled in Congress. The Agency, as proposed, would have broad powers to police the financial industry and to protect consumers. The Agency would regulate mortgages, credit cards, payday loans and other financial issues.
The House of Representatives has passed the initiative. However in the Senate, the Banking Committee has shown little support for the bill as passed in the House. The opposing sides argue as to whether government intervention of this nature would be a solution or a problem. It is unlikely that the bill will advance unless the Banking Committee’s Chairman, Sen. Chris Dodd, and the ranking Republican member, Sen. Richard Selby, are able to craft a compromise.
A commentary in the Washington Post (The CFPA: How a crusade to protect consumers lost its steam) summarizes the arguments for and against the proposal. Business groups, like the US Chamber of Commerce and the American Bankers Association, argue that the proposal is an unnecessary intrusion by the government and that existing regulatory bodies are already in place to govern the financial industry. Consumer groups, like the Consumer Federation of America, argue that it is unwise to rely on the same regulatory bodies that failed to police the banking industry that resulted in some of the problems we face today.