House Financial Services Committee Chairman Barney Frank (D-Mass.) is preparing a new draft of legislation that would set up a Consumer Financial Protection Agency (CFPA) with broad authority to regulate consumer products such as home loans and credit cards.
At the same time, a group of 15 law professors sent lawmakers a letter this week backing the new regulatory agency.
The proposal for a new agency has emerged as an early flashpoint in the broader debate over a series of new financial regulations that also include major changes to the regulation of banks and complicated financial derivatives.
Amid a lobbying push and a series of concerns from centrist Democrats and Republicans, Frank delayed a hearing before the August recess. Frank is now reworking parts of the bill and is eyeing a markup on the legislation by mid-October.
“This is a long game,” said Elizabeth WarrenElizabeth WarrenWarren reads middle school students' letters on climate change Warren on attending Trump’s inauguration: ‘I wanted it burned in my eyes’ Maher on Obama speaking fee: Isn’t that what cost Clinton the election? MORE, a Harvard University professor who strongly backs the CFPA proposal, in an interview with The Hill. “The opponents have a lot of money to spend, but the proponents have a lot of voters on their side to answer to. Those groups may work on different timelines, horizons, but what matters is the end result.”
Sen. Chris Dodd (D-Conn.), chairman of the Senate Banking Committee, is working to draft legislation with Sen. Richard Shelby (Ala.), the ranking Republican on the panel. Centrist senators are expected to have concerns with the CFPA proposal, according to financial lobbyists.
Several of the biggest financial lobbying associations — including the American Bankers Association (ABA) and Independent Community Bankers of America (ICBA) — are notably missing from the business coalition campaign. They are opposed to the CFPA proposal as written, but are working on other efforts to win over lawmakers.
David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness, said on Tuesday that the coalition would spend at least $2 million to defeat the CFPA proposal.
Hirschmann said the coalition, which began during several summer meetings, has organized 22,000 letters to members of Congress in opposition to the agency proposal.
The coalition is running ads in Washington-area publications and has focused its efforts primarily on making the case that small businesses, such as butcher shops and bakeries, would be harmed by a new agency. “We’ll spend whatever it takes,” Hirschmann said. “It’s a high priority for the Chamber.”
Apart from those wholesale attacks on the agency, which congressional supporters and consumer advocates decry as red herrings, opponents argue that the proposed agency’s broad authorities must be more narrowly tailored.
Frank and centrist Democrats have been debating several more specific changes to the bill, including on the issue of federal pre-emption of state laws. Frank has said for weeks that he is opposed to a provision in the administration’s draft bill that would require firms to offer “plain vanilla” products alongside others.
Those changes are unlikely to satisfy the Chamber and many opponents.
Hirschmann said the coalition opposes any new agency that would oversee consumer protection while the existing bank regulators continue to oversee the same firms for safety and soundness.
“What we cannot support is a competing power,” said Hirschmann. But he recognizes that there is substantial support in Congress for strong and new consumer protections, and particularly under a new agency.
“I don’t know if we’ll win on whether a separate consumer regulator is the right idea,” Hirschmann said.
Among those supporting the idea are the law professors, who urged “swift action” in their letter.
“An independent agency with consolidated authority and a consumer-oriented mission such as the one being considered by your committees is likely to improve public confidence,” the law professors wrote.