Posted on 30 Jun 2009
The Treasury Department unveiled legislation Tuesday to create the Consumer Financial Protection Agency, a new agency that would be charged with protecting consumers from unfair or deceptive financial products.
If Congress were to sign off on the 152-page bill, it would mean that for the first time, a single agency would have broad authority to take enforcement action against any firm that provides consumer financial products such as mortgages or credit cards, the Treasury said in documents it provided Tuesday.
The Obama administration officially announced plans for the agency earlier this month as part of a broad plan to revamp U.S. finance rules.
"The agency will have only one mission -- to protect consumers -- and have the authority and accountability to make sure that consumer-protection regulations are written fairly and enforced vigorously," Treasury Secretary Timothy Geithner said in a statement Tuesday.
The Treasury said the current financial system spreads responsibility for consumer protection across multiple agencies. The legislation, however, seeks to streamline things -- by making the new agency the primary federal financial consumer protection supervisor.
"A single agency will be able to be more responsive to changes in the market and more vigorous in addressing unfair and abusive practices," the Treasury said in a fact-sheet on the bill.
The Treasury said the agency would work with the Department of Housing and Urban Development and the Federal Reserve on efforts to eliminate unnecessary mortgage-related paperwork, among other things. It would enforce recently enacted credit-card legislation and ban unfair practices such as "yield spread premiums," which are side payments from lenders that encourage mortgage brokers to push consumers into higher priced loans.