DATE: JULY 16, 2009
DATE: JULY 16, 2009
TO: NCOIL LEGISLATORS
FROM: SUSAN NOLAN
NCOIL EXECUTIVE DIRECTOR
RE: DEBATE CONTINUES OVER CONSUMER PROTECTION AGENCY
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The following information is provided for your review:
• 7/16 Consumer Perspective Hearing Video/Testimony (U.S. House Financial Services)
• 7/16 Role of the Federal Reserve Hearing Video/Testimony (U.S. House Financial Services)
• Fed Official Opposes Consumer Finance Plan (7/16 Congressional Quarterly)
• Insurance Groups Seek to Escape Regulation Under New Agency (7/15 The Wall Street Journal)
The House Financial Services Committee (HFSC) and its Domestic Monetary Policy Subcommittee each held a hearing today during which the President’s proposal to create a Consumer Financial Protection Agency (CFPA) was debated. The HFSC hearing focused on consumer representative’s perspectives regarding the President’s regulatory reform plans, while the Subcommittee hearing was scheduled to discuss consumer protection and the role of the Federal Reserve Bank (Fed). The hearings followed a Wednesday session on the banking industry’s perspective on reform and preceded a Friday hearing that will bring in other financial services industry representatives to discuss the proposals. The Committee has also scheduled a meeting on Wednesday, July 22, to hear from regulatory perspectives.
NCOIL
As we reported earlier this week, NCOIL has distributed a Resolution Favoring Continued State-Based Insurance Consumer Protection to relevant Congressional Committees and to sponsors of pending legislation to create a CFPA or a similar Financial Product Safety Commission. The resolution—unanimously approved by NCOIL at its Summer Meeting—supports state-based insurance consumer protection and says that any new consumer protection entity should NOT have jurisdiction over insurance products/measures.
HEARINGS
In the first hearing, six of the seven consumer representatives, including representatives of the Consumer Federation of America (CFA), and the Public Interest Research Groups (PIRG’s), supported the CFPA. The one exception was a former Fed Representative, now with Morrison & Foerster LLP, who, in response to a question from Chairman Barney Frank (D-MA), admitted that consumer issues get “insufficient attention” in the existing federal system. During the second hearing, a representative of the Fed opposed the creation of a CFPA, instead arguing that the Fed should maintain its consumer protection responsibilities.
OPPOSITION/SUPPORT
Committee members have divided largely along party lines, with Democrats endorsing the CFPA and Republicans in opposition. Chairman Frank and 11 Democratic cosponsors have introduced legislation to create the CFPA. Banking industry representatives remain opposed to consolidating consumer protection authority at a CFPA; consumer representatives support creating an entity whose sole purpose is consumer protection; and insurance industry representatives have argued that insurance must not be included in the scope of a CFPA.
For more information or if you have any questions, please feel free to contact Mike Humphreys at 202-220-3014 or at mhumphreys@.
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