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Edited on Wed Jan-06-10 04:10 PM by doeriver
H.R. 4173: Rep. Phil Roe (TN-1) to protect Consumer Loan Sharking (Email newsletter)
More Federal Bureaucracy?
When I conducted a telephone town hall in East Tennessee, I heard your frustration over the lack of jobs and high unemployment rate. The American economy continues to lose jobs, and this is very frustrating to me as well. What’s even more frustrating is the lack of accountability and the run-away spending we are seeing by the Majority. Furthermore, I oppose the Democrats’ policies that I believe will kill jobs and raise taxes at a time when we are trying to get people back to work.
Before Congress adjourned, the House considered Massachusetts Democrat Barney Frank’s overhaul of our financial system. We all know that there were abuses by big banks on Wall Street that contributed to our recent economic problems, but rather than trying to implement corporate rules that work, this bill centralizes authority in a single individual and adds a new, complicated layer of bureaucracy that will raise the cost of doing business. The 1300-page bill establishes a new Consumer Financial Protection Agency (CFPA) to review and approve consumer financial products and ration consumer credit. This agency will be led by a “Credit Czar” who will have unprecedented (and virtually unchecked) authority to restrict product choices for consumers, and impose fees and other assessments on providers of financial products and services and financial transactions.*
I believe a new czar is a bad decision, but what’s even worse is that now Congressman Frank is promising to seek the appointment of a liberal Harvard Professor to this position, one that will instantly become one of the most powerful in all of government.
The CFPA would result in tighter credit, higher costs and fees and fewer options. The CFPA would also hold great power to regulate without any responsibility for safety and soundness of the banks. What we should do is improve disclosure, and crack down on criminal actions by lenders and quit rewarding dangerous behavior with taxpayer dollars. Quite frankly, this is a new layer of bureaucracy in a government that is overloaded with bureaucracy.
Furthermore, this legislation also imposes a massive tax during a credit crisis and weak economy. This bills pays for the government’s “bailout authority” by assessing a $150 billion tax on financial firms, which will be passed on to consumers and investors in the form of higher interest rates and increased fees. If sufficient funds cannot be extracted from the industry to pay for the failures of firms the government deems “systemically significant,” taxpayers will be on the hook. The assessments will drain capital from the financial system that could be used for lending or investment that would create jobs and fuel economic growth.
H.R. 4173 also expands the power of the Federal Reserve. This legislation will increase the risk of catastrophic failure of financial firms by concentrating responsibility for overseeing “systemically risky” firms in the Federal Reserve, whose inability to identify and address past risk helped cause the financial crisis in the first place. These provisions represent the most breathtaking expansion of Fed power since the central bank’s creation almost a century ago. The extraordinary market interventions conducted by the Federal Reserve since the onset of the financial crisis have added trillions of dollars to the government’s balance sheet and taken it far afield from its core mission of conducting the nation’s monetary policy.
I believe this legislation is bad for the state of our economy. The American people don’t want more government intrusion in their life. They want a healthy economy and a better future for their family.
As always, please feel free to contact my office if we can be of assistance to you or your family. You can contact my office by mail, email or phone. Our contact information can be found on our website, www.roe.house.gov.
*Putting aside all of Rep. Roe's rhetoric about H.R. 4173, just what is the actual legislative intent for Frank's proposed Consumer Financial Protection Agency (CFPA) legislation?:H.R. 4173: Rep. Phil Roe to protect Consumer Loan SharkingE-NEWSLETTER (TN-1, Rep. Phil Roe)
House to Begin Work on Consumer Financial Protections
http://www.opencongress.org/articles/view/1287-House-to-Begin-Work-on-Consumer-Financial-Protections
October 12, 2009 - by Donny Shaw
...As important as the agency would be, most people don’t really know what it is. Below is my attempt at a quick explainer, laying out the agency’s responsibilities and authorities with links to specific provisions in the bill text so you can drill down for more detail.
Basically, the Consumer Financial Protection Agency would take powers away from a range of other regulators and combine them to be the sole federal regulator for the types of financial products that ordinary people deal with on a day-to-day basis, like mortgages and credit cards. Their focus would be unique – instead of working to protect safety and soundness in the financial markets, they would work to ensure that the financial markets are safe for consumers.
The bill’s going to change as it goes through the legislative process. In fact, it’s already changed a bit (it’s been weakened in a few major ways) since it was introduced in July. Most of the bill language is vague. It doesn’t spell out exact rules for consumer financial products, but gives the agency jurisdiction over certain areas and directs them to make their own rules. Based on the current state of the legislation, here’s what you need to know about the Consumer Financial Protection Agency being considered by Congress:
*It’s mission would be to "to promote transparency, simplicity, fairness, accountability, and access in the market for consumer financial products or services. More specifically, it would be in charge of ensuring that
(1) consumers have access to the information they need to make responsible decisions about consumer financial products;
(2) consumers are protected from abuse, unfairness, deception, and discrimination;
(3) consumer financial markets are operated “fairly and efficiently with ample room for sustainable growth and innovation;” and
(4) “traditionally underserved consumers and communities have access to financial services.”
Their area of oversight would apply to all consumer financial products or services. The bill text defines these as “any financial product or service to be used by a consumer primarily for personal, family, or household purposes.” It’s generally understood to include mortgages, credit cards, debit cards, car loans, payday loans, gift cards, credit score reporting companies, debt collectors and financial advisers.
The agency would have the power to determine what consumer financial products or services are unfair, deceptive, abusive, or discriminatory and make rules to ban them, restrict them, or place them under special conditions. In using these powers, the bill directs the agency to consider “the potential benefits and costs to consumers and covered persons, including the potential reduction of consumers’ access to consumer financial products or services.”
The agency would have the power to subpoena people and information in order to discover violations of their rules in the financial consumer products markets. They would also be able to prosecute violators and levy fines.
Fines collected by the agency from companies that violate their rules would be put into a “Consumer Financial Protection Agency Civil Penalty Fund” and paid out to people who have been victims to unfair and deceptive practices in the consumer financial market.
The bill gives the agency specific authority to restrict mandatory pre-dispute arbitration clauses in consumer financial products. These are clauses buried in the fine print of contracts that require consumers’ disputes to be heard in private by arbitrators rather than in the courts. The agency would be have the power to prohibit or impose limitations on these clauses if they determine that doing so would be in the public interest and good for the protection of consumers.
The agency’s rules and regulations would be treated as a floor, not a ceiling for further state regulations. In other words, if they set rules that are stronger than individual states’ laws, the agency rules would take precedence. But if the agency’s rules are weaker than the laws in an individual state, the stronger state law still applies in the state. The agency would be in charge of deciding whether a state law provides greater protection than the federal rules and should be left in tact in that state. This provision is being targeted for removal by the business-friendly New Democrats coalition. They are proposing an amendment that would restrict states from enforcing tougher laws than what the agency promulgates.
The agency would be lead by five board members, each serving staggered five-year terms. Four of the members would be appointed by the President and confirmed by the Senate; the fifth would be “the head of the agency responsible for chartering and regulating national banks.”
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