This is a critical time for the Obama Administration’s proposed Consumer Financial Protection Agency, a centerpiece of its financial market reforms.
The CFPA, officially proposed in June, is under fierce attack by the financial services industry, the U.S. Chamber of Commerce and a growing number of business groups. Those forces scored a few points Tuesday when House Financial Services Committee chairman Barney Frank announced that his committee is delaying consideration of the CFPA until September. Frank originally aimed to have the committee approve the legislation by early August.
Though some lobbyists proclaim to be backing the administration’s plans for financial reform, they’re adamantly against an agency that will have consumer financial interests as its sole focus. Steve Bartlett, head of the Financial Services Roundtable, told The New York Times that his group has a dual goal: to support comprehensive reform and to kill the CFPA.
The need for the CFPA also took a hit from Federal Reserve chief Ben Bernanke, who weighed in testifying before the Senate Banking Committee Wednesday, arguing that the Fed should keep its consumer protection powers instead of transferring them to the CFPA. Bernanke also suggested that Congress beef up the Fed’s consumer protection role.
Consumer groups are fighting back and recruiting their own allies from the financial services world to support the CFPA. On Wednesday, Rep. Frank joined Americans for Financial Reform for a press conference on Capitol Hill to make the economic case for the new agency. Bennett Freeman, an executive at Calvert Investments, and Tim Duncan, founder of Story Street Wealth Management, were on hand to support the call for the CFPA.Meanwhile, Elizabeth Warren, who originated the idea for a consumer financial product safety commission two years ago and is expected to become its chief — if and when the agency is created — posted a YouTube video Monday to bring her case for the CFPA directly to the public. She also testified before Congress on the need for the agency earlier this month. And on Monday, Warren published an article in Baseline Scenario debunking three myths about the proposed agency.
Where do you stand on the need for a consumer financial watchdog? Do you think the Obama administration is doing enough to make sure its proposed CFPA becomes a reality? Or is it a misguided effort?