House Financial Services Committee To Start Markup Of Systematic Risk Bill Wednesday

By Meagan Wiseley - University of New Mexico/Talk Radio News Service

Chairman of the House Financial Services Committee Barney Frank (D-Mass.) told reporters at a press conference Tuesday that debate and markup of the Investor Protection Act will begin Wednesday and markup of other systematic risk legislation will follow.

“We will start the markup...beginning tomorrow, and everyday that the House is in session until we finish,” Frank said.

Following the consideration of the Investor Protection Act of 2009, the committee will begin markups of the Federal Insurance Office Act of 2009, the Financial Stability Improvement Act of 2009 and the Overdraft Protection Act.

Frank added that he expects aspects of the larger financial regulatory reform legislation, including the creation of the Consumer Financial Protection Agency, to be voted on by December.

“The earliest we can get to the floor will be the first week in December,” Frank said.

Consumer Protection Activists Request Rejection Of Amendment To Financial Regulatory Bill

By Meagan Wiseley - University of New Mexico/Talk Radio News Service

The Americans for Financial Reform said today they are urging the House Financial Services Committee to reject an amendment that will be proposed by Rep. John Campbell (R-Calif.) to exemplify auto dealers loan financing from the Consumer Financial Protection Agency.

In a conference call Tuesday, President of Consumers for Auto Reliability and Safety Rosemary Shahan said, “the majority of car dealer profits are from the finance and insurance departments, which are much less transparent. Finance managers are paid on commission and their incentive is to maximize profits from the financing and the add ons.”

Shahan said one tactic used by some auto dealers is "yo-yo financing," wherein the dealer will offer a reasonable and competitive interest rate, then switch to a much higher rate and force the consumer to resign a new contract with the higher interest rate.

“If [the consumer] doesn’t want that rate, [the dealer] will threaten to report the car as stolen or put pressure on the consumer to sign another contract with worse terms,” said Shahan.

Shahan also said this financing tactic is more frequently directed towards African Americans and Latinos.

The House Financial Services Committee began the markup of the The Consumer Financial Protection Agency bill last week, and continued through Tuesday. The bill was introduced to the House by Financial Services Committee Chairman Barney Frank (D-Mass.) on July 9, 2009.

In a statement, Frank said, “I am confident that we will produce a bill that will provide greater consumer protections while in no way burdening the legitimate activities of responsible banking.”

Expect Debate On Proposed Consumer Financial Protection Agency To Take Place Soon

House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) announced Thursday that a markup for legislation regarding a recently proposed Consumer Financial Protection Agency will occur in two weeks.

Frank said during Thursday's hearing that the goal of the proposed agency is to streamline consumer protection rules and serve as a building block for financial reform.

"Consumer protection suffers very deeply and this bill would remedy that," said Frank

The Massachusetts Democrat explained that if passed, the legislation would take power and funding from the Federal Reserve.

"We do not think that banks should be charged extra for this...the Federal Reserve will be ceding a lot of power that is not used very much and funding will come with it," said Frank.

Proposed Financial Regulatory Agency Will Protect Consumers, Claims Treasury Official

Leah Valencia, University of New Mexico-Talk Radio News Service

U.S. Treasury Department Director for Consumer Protection Peggy Twohig said that establishing a far reaching financial regulatory agency could create a system of checks and balances for financial institutions, thus ensuring the strength of the U.S. economy.

“An agency would create uniform protection for consumers and make a level playing field for all types of financial services,” she said.

While discussing the Obama administration’s proposed Consumer Financial Protection Agency at the New American Foundation Friday, Twohig said it is necessary for all financial institutions to learn a sense of responsibility for the consumer by following base regulations

“The administration has supported that,” she said. “Part of the legislative proposal is for federal rules to be a floor not a ceiling that would apply to everyone.”

Twohig said there was not acceptable oversight of banking sectors in the past, adding that this caused a race to the bottom, where nonbank lenders offering aggressive products often steered consumers to unacceptable loans. As a result, banks who wanted to compete felt pressured and began to loan irresponsibly. Twohig said the proposed agency will prevent such an occurrence in the future.

“We need basic standards that will protect all consumers,” she said. “This will help the responsible players... who want to offer straightforward transparent products for consumers.”

Bankers Welcome Regulation, But Skeptical Of Plans For Regulatory Agency

By Learned Foote- Talk Radio News Service

On Wednesday, a panel of banking experts expressed reservations over certain aspects of the regulatory reform proposals that the Obama administration has put forth.

In a hearing before the House Financial Services Committee, representatives from the financial services industry criticized plans to create a Consumer Financial Protection Agency.

In recent weeks, Committee Chairman Rep. Barney Frank (D-N.J.) cited a “flood of complaints” regarding practices in the financial industry. Rather than create laws to deal with each complaint, Frank has argued that conflict could be mitigated by a Consumer Financial Protection Agency.

Steve Bartlett, President and CEO of the Financial Services Roundtable, acknowledged that the “status quo is unacceptable,” and argued that regulation reform “should be comprehensive, should be systemic, and should be quite large in terms of its scope." He criticized the current system of regulation, which he said featured “hundreds of different agencies who regulate the same companies with the same activities in totally different ways based on different statutes, different standards.”

Bartlett nonetheless emphasized that he and his company “strongly oppose” the creation of a new agency, and recommended that Congress instead pass legislation enacting “strong national consumer protection standards.”

Steven Zeisel, Senior Counsel at the Consumer Bankers Association, said that he supported regulatory reform as well, but expressed reservations about the CFPA. He said that the legislation could require retail banks in different states to follow many different laws, which could make lending more complex, and could potentially the limit the availability of credit while raising costs for the consumer. He also said that the legislation will require banks “to offer products designed entirely by the federal government,” which could stifle innovation.

Rep. Scott Garrett (D-N.J.) said, “I don’t think Americans want government bureaucrats deciding if they are smart enough, sophisticated enough to take out a line of credit at the local retailer, or policing whether the credit cards that they choose offer reward points or not. When you come down to it, having choices is part of being an American.”

Rep. Maxine Walters (D-Calif.) harshly criticized the arguments of the panel. She said that they had “no real support for a consumer finance agency to protect consumers from these exotic products that worry us so much.” “You will work your magic with your influence in the Congress of the United States to keep any real strong legislation from ever coming out of here,” she continued. She also disputed the claim that the CFPA would raise consumer costs.

“I am just dumbfounded that we have before us representatives of the overall industry here today who do not appear to understand we have a crisis,” she said.