Obama Proposes New Consumer Agency; Democrats Welcome Proposal, but Business, Industry Skeptical
Byline: Sean Lengell, THE WASHINGTON TIMES
The Obama administration Tuesday proposed legislation for a financial oversight agency designed to protect consumers and investors from unscrupulous deals - a plan praised by Democrats, but met with skepticism on Wall Street.
The proposal also faces a political tussle on Capitol Hill, where pro-business Republicans have opposed past administration attempts at bank reform.
The White House sent Congress a 152-page draft bill to create the Consumer Financial Protection Agency, which it says would offer greater consumer protections for such financial products as mortgages, credit cards and loans by establishing simpler and more transparent rules and regulations.
This agency will have the power to set standards so that companies compete by offering innovative products that consumers actually want - and actually understand, said President Obama, whose administration first announced plans for the agency about two weeks ago.
Mr. Obama promised that the most unfair practices by financial institutions would be banned, such as those ridiculous contracts with pages of fine print that no one can figure out, adding that those things will be a thing of the past.
The agency, if enacted by Congress, would consolidate many of the regulatory duties that are spread over several agencies, such as the Federal Reserve and other regulatory agencies.
Consumer protection will have an independent seat at the table in our financial regulatory system, Treasury Secretary Timothy F. Geithner said. By consolidating accountability in one place, we will reduce gaps in federal supervision and enforcement.
Financial institutions argue that tighter controls and more regulations would stifle investments and innovation in the financial world and possibly slow down the flow of capital through the markets, a scenario blamed for last year's Wall Street meltdown.
The agency would actually harm consumers by increasing the cost of financial products and reducing the availability of credit and consumer choices, said Steve Bartlett, president and chief executive of the Financial Services Roundtable, a trade group representing the largest U. …