What’s the status on the proposed Consumer Financial Protection Agency?
Whatever your opinion of the federal government’s plan to oversee your finances, you should know that small business still has a voice with the power to affect legislation. We’ve been hearing for weeks about the HR 3126, which is the White House proposal to create a giant regulatory agency called the Consumer Financial Protection Agency (CFPA). If passed, the CFPA will serve as a watchdog over financial instruments like your mortgage, your credit cards, your checking and savings accounts, your investments, and more. In the flurry of “hurry” that has surrounded this bill, it seems cooler heads outside of the government have at least succeeded in buying time for deliberation.
Not all of the details of the proposed CFPA have not been fleshed out, or at least they have not been made public. Even so, those leading the charge – including Financial Services Committee Chairman Barney Frank -- were adamant about the need to pass the proposal into law quickly, before Congress left for its month-long vacation in August. Others – Republicans and some notable Democrats -- urged their fellow Congress members to slow down, read the bill, and consider the consequences of the proposed actions before casting a vote.
Finally, amidst the noise, the U.S. Chamber of Commerce – the world’s largest business federation, representing more than three million businesses – has been heard, and for now, the measure has been tabled. The House Financial Services Committee has agreed to postpone the vote until September. Among the concerns expressed by the Chamber is the proposed agency’s oversight of credit cards. Seventy-seven percent of small business owners use credit cards to help finance their business needs. If passed, the CFPA will require every financial institution to standardize the financial products they offer, according to a government- created design that will further the federal government’s agenda. Critics say this will slash the availability of affordable credit for small business owners, by preventing lending institutions from offering alternatives tailored to the needs of a business.
On July 20th, the Chamber and 22 other trade associations sent a letter to the House Financial Services Committee, expressing their concerns about the millions of businesses that could fail if they cannot afford the limited choices of financing that would be available. The letter asked Committee Chairman Barney Frank and Ranking Republican Member, Spencer Bachus to delay the vote until after Congress returns from their August vacation.
“There needs to be adequate time for all stakeholders, including Congress, the business community, and consumers, to fully understand this bill’s implications, how it will impact consumers and their access to credit, the true costs of creating such an agency, and whether a new stand-alone consumer protection agency is necessary or whether enhancing the regulatory power of existing regulators can accomplish the same goal,” the letter stated. Among the points made, were that adding yet another layer of regulation would increase costs, frustrate innovation, and severely limit consumer choice.
David Hirschmann is the president and CEO of the Chamber’s Center for Capital Markets Competitiveness. In a separate statement he urged Congress to consider fixing the problems with the existing system rather than throwing it out, stripping authority away from viable organizations like the Federal Trade Commission, and consolidating power into one mammoth agency.
“The Chamber has been calling for better and more effective protection of consumers and welcomes Congressional efforts to achieve that goal.
“However, there has been growing concern among a diverse group of industries that current proposals would take away consumer choice, would give government unprecedented powers over American’s personal information, and open the flood gates to litigation abuse.
“We will support efforts to insure consumers have the information they need and are protected from predatory and other illegal practices. We will oppose efforts that fail to address the weaknesses of our current regulatory structure by simply adding new layers of government. We look forward to working with Congress on a plan that is clear and will actually help consumers.”
You can read the full text of the Chamber letter.