Consumer groups have been putting on a full court press lobbying for the proposed Consumer Financial Protection Agency or CFPA to be included in the financial reform legislation now pending before Congress. The CFPA was proposed by the Obama Administration last year as an independent agency that would be responsible for rulemaking and enforcement over the terms of consumer lending and deposit products. As part of this proposal, rulemaking authority over consumer credit and deposit law primarily housed at the Federal Reserve would be transferred to the new agency. The agency in turn would be responsible for ensuring that the terms and the marketing of consumer financial products would be fair and clear to consumers.
The financial reform bill that passed the U.S. House of Representatives included the CFPA, but also exempted from its enforcement authority whole classes of players, including banks with assets below $10 billion, retailers, car dealers, tax preparers, investment advisors and others.
The proposal to establish the CFPA has been one of the major, if not the major point of contention in the Senate Banking Committee, as it has struggled to release a comprehensive financial reform bill that has broad support. Hence the full court lobbying campaign by consumer groups. As expected, traditional lobbying techniques are being used, including support pieces in the op ed pages in the New York Times, Washington Post and Wall Street Journal by such spokespersons as Elizabeth Warren, the Harvard University professor who has been generally credited with the idea for the agency, and Barney Frank, the head of the Financial Services Committee of the U.S. House of Representatives and a strong supporter of the CFPA.
However, more nonconventional means also are being employed. For example, last week a very funny skit was posted on funny or die, that was directed by Ron Howard, using stars from SNL, including Dan Ackroyd, Jim Carrey and Dana Carvey as past Presidents appearing to President Obama in a dream, urging him to push for a CFPA. Each of the past Presidents, from Jimmy Carter to George Bush, takes on at least some responsibility for allowing the regulatory environment that led to the financial crisis of 2008. Viewers are urged to contact their legislators to push for the CPFA.
Almost as entertaining from a detached viewpoint, however, has been various proposals floated by the Senate Banking Committee staff with respect to the CFPA. Unlike the House, the Senate has proposed the CFPA to be a division within an agency of the federal government. Proposals have ranged from housing it within the Treasury Department to the FDIC. The latest proposal is to house the agency as a division within the Federal Reserve, which ironically is where most of the rulemaking for consumer products currently is housed, which rulemaking has been criticized for being too lenient.
As of today, the location and the ultimate structure of the CFPA is not resolved. There is sure to be more plot twists before it is over. However, the hope is that, regardless of the techniques used to promote it, or the various proposals to structure it, serious thought will continue to be given to how to provide consumers that use financial products and services with clear and complete information on those products and services, and protect consumers from unfair and deceptive practices while preserving the innovative and wide variety of services available to meet various consumer needs.
