Financial Regulatory Reform: Analysis of the Consumer Financial Protection Agency (CFPA) as Proposed by the Obama Administration and H.R. 3126

摘要

In the wake of what many believe is the worst U.S. financial crisis since the Great Depression, the Obama Administration has proposed sweeping reforms of the financial services regulatory system, the broad outline of which has been encompassed in a nearly 90-page document called the President's White Paper (the White Paper or the Proposal). The Proposal seeks to meet five objectives: (1) Promote robust supervision and regulation of financial firms, (2) Establish comprehensive supervision and regulation of financial markets, (3) Protect consumers and investors from financial abuse, (4) Improve tools for managing financial crises. and (5) Raise international regulatory standards and improve international cooperation. The Administration likely will offer specific legislative proposals that would implement each of the five objectives of the White Paper. On June 30, 2009, the Obama Administration made available the first such legislative proposal, called the Consumer Financial Protection Agency Act of 2009. The Act would establish a new executive agency, the Consumer Financial Protection Agency (CFPA), to protect consumers of financial products and services. On July 8, 2009, Representative Barney Frank, Chairman of the House Financial Services Committee, introduced very similar legislation, H.R. 3126, which also is entitled the CFPA Act of 2009. This report provides a brief summary of the President's CFPA Act and delineates some of the substantive differences between it and H.R. 3126, as introduced. It then analyzes some of the policy implications of the proposal, focusing on the separation of safety and soundness regulations from consumer protection, financial innovation, and the scope of regulation. The report then raises some questions regarding state law preemption, sources of funding, and rule making procedures that the Act does not fully answer.