Catagory:Bureau of Consumer Financial Protection (CFPB)

By: Melanie Hibbs Brody, Steven M. Kaplan, David L. Beam, Stephanie C. Robinson

With the power to impose penalties of up to $1 million per day, the recently proposed Consumer Financial Protection Agency (“CFPA” or “Agency”)—an independent agency with the sole mission of protecting consumers—is the subject of much attention. After Congress returned from the Independence Day holiday, House Financial Services Committee Chairman Barney Frank introduced House Bill 3126—entitled Consumer Financial Protection Agency Act of 2009 (“bill” or “Act”). The bill mirrors draft legislation that the Obama Administration delivered to the Hill the previous week, with only a few substantive changes, and is based on the recommendations the Administration set forth in its financial regulatory reform package issued earlier this year to establish the Agency.

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By: Melanie Hibbs Brody, Stephanie C. Robinson

No one doubts that consumers have been hurt by the global financial crisis and a better federal and state regulatory regime could lessen the likelihood of future harm in the consumer credit arena. The question is how best to accomplish that objective? Is it simply a matter of better funding of the enforcement of existing laws? Is it prudent to impose new substantive obligations on providers of consumer financial products and services? Do we need to shuffle the boxes out of which regulators operate to ensure a better-coordinated approach to government regulation and enforcement?

At a press conference on June 17, 2009, President Obama laid much of the blame for the financial crisis on gaps in financial regulation. To fill in those gaps, the President unveiled his proposed financial regulatory reform package—a white paper entitled A New Foundation: Rebuilding Financial Supervision and Regulation. Among many recommendations for significant change, the reform package recommends the creation of a new federal agency with the singular job of, in the words of Mr. Obama, “looking out for consumers.” The new Consumer Financial Protection Agency (CFPA) would be designed to protect consumers in the financial products and services markets, and would be the primary federal consumer protection supervisor.

To read the complete alert online, click here.

By: Melanie Hibbs Brody, Stephanie C. Robinson

Advocates for the creation of a new federal financial regulatory body claim that consumer loans and toasters have something in common—both are useful and convenient, but either one could explode in your face. In an effort to protect consumers against the risks associated with risky financial products—particularly the types that contributed to the country’s current foreclosure crisis—Senators Richard Durbin (D-IL), Chuck Schumer (D-NY), and Ted Kennedy (D-MA), and Congressmen Bill Delahunt (D-MA) and Brad Miller (D-NC) recently introduced legislation (S.566 and a companion bill, H.R. 1705) that would create the Financial Products Safety Commission (the “FPSC” or the “Commission”), a federal financial regulatory body designed to protect users of consumer financial products and services from unreasonable risk. 

To read the complete alert online, click here.