House Financial Services Chairman Barney Frank, D-Massachusetts, said today he opposes a Senate proposal to house a consumer financial protection agency within the Federal Reserve because of the central bank’s “historical failure” to address consumer protections.
It was Frank and his Financial Services Committee that formulated the barely-approved financial oversight reform in the House in December. A centerpiece of the bill was an independent Consumer Financial Protection Agency.
“I do not support housing the CFPA in the Federal Reserve,” Frank said today in a statement. “I continue to vigorously support the House-passed bill that establishes an independent agency with strong rule-writing authority and enforcement powers to implement consumer protections.”
He said his main objection was the Central Bank’s “historical failure to implement consumer protection as a central part of its mission and role.”
Frank said he would support housing the new agency within the U.S. Treasury, “provided that the entity has sufficient independence and broad regulatory scope to accomplish the mission of protecting consumers.”
Frank’s statement came a day after the Fed-housed agency proposal emerged out of Senate talks on financial system reform. Sen. Christopher Dodd, D-Connecticut, the chairman of the Senate Banking Committee, and Sen. Bob Corker, R-Tennessee, a Republican member of the committee, have been working out a compromise, but the plan continues to be either opposed outright or received less than warmly.
Under the original plan by President Obama and backed by Frank, the CFPA would regulate credit cards, mortgages and other financial products as an independent entity. Banking and business groups have campaigned vigorously against the CFPA, in any form, for fears of standardizing consumer loan products to the detriment of businesses and financial institutions.
Consumer advocates have sided with Frank and President Obama in support an autonomous entity uninfluenced by banking regulators.
