Will American consumers get their long discussed, long fought-over Consumer Protection Agency? As the wrangling over the finance reform bill begins to draw to a close, some form of the new CPA appears in both the House and Senate bills. A joint committee of the two houses is expected to meet soon to reconcile the differing versions of the agency in each bill.
According to Reuters, the two versions of the agency are quite different. In the Senate version, the Federal Reserve would be in control. The independent Bureau of Consumer Financial Protection would be within and funded by the Fed. The agency would have power to write and enforce consumer protection rules, but the Fed would be charged with overseeing the agency. In the House version, the U.S. Consumer Financial Protection Agency would be an independent body. Its job would be to regulate mortgages, credit cards and other financial concerns.
One point of contention is the ability (or not) of the new agency to regulate auto dealers. According to the Chicago Tribune, this is a topic the joint committee must address. Lawmakers have been struggling with the exact role auto dealers play in auto financing and how much discretion they have to set terms, and thus potentially take advantage of consumers.
The dealers that assist in car loan financing say they're just middlemen in the process, helping buyers secure the best loans. Dealers say that abuses are rare and already covered by anti-fraud regulations enforced by state officials and the Federal Trade Commission. The dealers hope the new agency will not have oversight on their financing practices, something that they claim will just drive up prices for consumers.
Whether or not the new agency will have oversight responsibilities on car loan financing, they will have plenty to do stopping "unfair and deceptive" practices, especially in the credit card and payday loan sectors. The Chicago Tribune "On Money" column reported what FDIC Deputy Director, Robert W. Mooney, had to say on the subject. Mooney said the industry has left American consumers "angry." He believes stopping lender deception will be easier than stopping "unfair" practices, which are more pervasive and harder to prove.
According to the Tribune, the agency in the House bill has more teeth. The weaker Senate bill was passed after the financial services lobby fought hard to water down the House bill.