Last Wednesday, a group of industry trade associations, including the U.S. Chamber of Commerce, the American Financial Services Association, the Business Roundtable, and the Financial Services Roundtable, sent a letter to Senators Christopher J. Dodd (D-CT) and Richard C. Shelby (R-AL), the Chairman and Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs, respectively, asking for changes to be made to the proposed Consumer Financial Protection Agency (CFPA) as described in Chairman Dodd’s draft language.
While the associations represented in the letter stated that they believe that reform is necessary, they also believe that the CFPA will have “severe unintended consequences for consumers, small businesses, and the economy” unless certain modifications are made. The associations pointed our six primary problems with the CFPA as described in Chairman Dodd’s proposal:
- Although the CFPA is described as targeting consumer financial products, the CFPA would have authority over businesses that are not primarily engaged in consumer finance;
- The CFPA will duplicate existing consumer protection regulation by the Federal Trade Commission (FTC);
- Federally regulated financial institutions would become subject to state consumer protection laws, and the CFPA’s regulations will be enforced by the states with no supervisory control by the new federal agency, which will create overlapping and inconsistent disclosure rules and higher costs for businesses;
- The regulatory standards are too vague and businesses will have difficulty knowing how to comply with CFPA rules;
- Regulation of consumer products will be separated from regulation of the financial institutions that offer them, despite the fact that these regulatory goals are inextricable; and
- The CFPA proposal would amend the Federal Trade Commission Act and expand the power of the FTC, affording the FTC “unprecedented and sweeping powers to execute its broad mandate, in addition to the new and duplicative authority granted to the CFPA.”
The associations represented in the letter stated that they "look forward to working" with the Senate "towards an alternative to the CFPA that will protect consumers without choking the economic growth that our country so urgently needs."