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The Consumer Financial Protection Agency

posted by Adam Levitin

I've written a short research brief (also here) on the Obama administration's proposed Consumer Financial Protection Agency for the Pew Financial Reform Project.  The research brief is a non-partisan guide to the issues involved in creating a CFPA.  It begins by reviewing the current state of consumer protection in financial services and the criticisms of the current regulatory regime. It then considers how a CFPA would address the criticisms of the current regulatory system and concludes with a discussion of the potential concerns about a CFPA.

Many of the issues discussed in the research brief will be familiar to Credit Slips readers, but one thing that I believe is unique to the brief is a detailed examination of the supposed conflicts between safety-and-soundness and consumer protection.  While this has been raised as a general specter or with an analogy to the conflict between affordable housing regulation and safety-and-soundness in the case of Fannie Mae and Freddie Mac (more on that specific case in another post), precious few examples of potential conflicts have been put forth.  The research brief considers the specific examples that have been raised and demonstrates through examination of the proposed statutory languag they are for non-issues either because of the careful way in which the CFPA delegates authority. 


Thank you for this post and the research paper link. The only (very minor) recommendation I would like to see added to the proposed legislation would be a mechanism for a defined feed-back loop to exist among the research, rule-making and enforcement arms of the proposed agency. For example, every research paper generated should have a cover page outlining the regulatory implications, rules affected and/or new rules proposed. It is a minor detail that can make a big difference between an agency that churns theoretical research and one that is bent toward implementing consistently relevant rules.

American Express is again raising rates on customers with excellent payment histories and excellent credit scores on both existing balances and future purchases alleging that, "(their) pricing has to be responsive to the business and economic environment."

I'd like to note that the WashTimes piece was inaccurate from the very first sentence: "Irish philosopher Edmund Burke once famously said, "Those who don't know history are destined to repeat it."

Sorry. This quote goes to Spanish-American philosopher George Santayana.

The last sentence of your post is garbled in some way.

It's ludicrous to describe your own work as nonpartisan.

well its soo good to see this information in your post, i was looking the same but there was not any proper resource, thanx now i have the thing which i was looking for my research.

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