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In Approving New Agency, Lawmakers Take Significant Step Toward Protecting Consumers, Addressing Causes of Economic Crisis

Oct. 22, 2009

In Approving New Agency, Lawmakers Take Significant Step Toward Protecting Consumers, Addressing Causes of Economic Crisis

 Statement of David Arkush, Director, Public Citizen’s Congress Watch Division

 Note: Today, the House Financial Services Committee approved H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act, sponsored by Rep. Barney Frank (D-Mass.), by a vote of 39-29.

 Today the House of Representatives took a significant step toward addressing some of the root causes of our current economic crisis – the exploding mortgages and abusive lending tactics that are robbing Americans and undermining the broader economy. The House Financial Services Committee has reported out the Consumer Financial Protection Agency (CFPA) Act, which would create a much-needed consumer watchdog to curb abusive lending practices.

The bill is strong in many significant respects. It establishes a robust, independent agency that has each type of authority it needs to perform well – rulemaking, enforcement and examination authority. Consumer advocates also successfully fought off the greatest challenge to the agency in committee, an attempt to make the new agency’s rules supersede state consumer protection laws. The bill contains several excellent provisions, such as best-practice whistleblower protections for millions of employees in the financial sectors and authority for the CFPA to limit forced arbitration in lending contracts.

At the same time, the bill has shortcomings that must be fixed in the full House and in the Senate, such as an exemption for auto dealers and less-than-full examination and enforcement authority over banks that hold 20 percent of the nation’s deposits. We look forward to working with the House leadership and consumer advocates in the Congress to strengthen the CFPA bill.

Chairman Barney Frank (D-Mass.) and Reps. Brad Miller (D-N.C.), Melvin Watt (D-N.C.) and Dennis Moore (D-Kan.) deserve gratitude for their hard work and leadership in moving this bill out of committee.