Treasury: New agency would streamline oversight

Draft legislation to create a new federal agency to ensure consumer protections in the financial services sector will help establish a more uniform regulatory regime for U.S. firms, Treasury Department officials said Tuesday.

In a briefing with reporters, Assistant Treasury Secretary for Financial Institutions Michael Barr asserted that legislation unveiled by the Treasury on Tuesday morning would simplify rules for community banks and credit unions while bringing larger financial institutions under a fairer regulatory umbrella.

"Consumer protection will be uniform, across the board, for all financial institutions," Barr said. "This is going to be a good thing, not a bad thing, for most financial institutions."

At the heart of the proposed legislation sent to Congress Tuesday morning would be the establishment of a new Consumer Financial Protection Agency to oversee different elements of the American financial services sector.

The agency would focus on issuing rules and regulations for consumer-oriented products such as mortgages and credit cards, but also things like payday loans and banks' overdraft policies and fees.

Barr characterized the new agency as a way to bring existing rules and regulations under a single authority, essentially reducing bureaucracy, while extending the government's reach to oversee sectors previously untouched by U.S. regulation.

Business groups like the Chamber of Commerce had criticized the consumer protection element of the Obama administration's overall initiative to reform American financial regulations as needlessly adding to the bureaucracy faced by businesses. Those groups had favored a more rigorous and streamlined enforcement of existing regulation.

Barr defended the Treasury proposal on Tuesday, hitting large financial institutions for defending existing rules.

"I don't think it's a surprise that big banks and financial institutions that benefited from the status quo want to keep it that way," he told reporters.