Last Friday, President Obama speaking in the White House East Room before several distinguished members of the Administration including Treasury Secretary Geithner, FDIC Chairman Bair and members of Congress reflected upon the Administration’s present efforts regarding consumer financial protection reform and reaffirmed his support for the creation of the Consumer Financial Protection Agency (“CFPA”).

In July, the Treasury Department released draft legislative language for the “Consumer Financial Agency Protection Act of 2009.” The draft legislation proposed the creation of a new CFPA that would have overarching authority over nearly every statute that affects consumers of banking institutions. The framework of the CFPA was first unveiled in the Administration’s White Paper that proposed the adoption of sweeping reforms to the federal regulatory structure for banking, insurance and securities firms. Chairman Barney Frank (D-MA) of the House Financial Services Committee later that month formally introduced H.R. 3126 which encompassed generally President Obama’s plan to strengthen consumer protection as part of the overall restructuring of financial regulation. Chairman Frank, last month subsequently revised and circulated new draft legislation regarding the framework of CFPA that seeks to clarify and enhance the agency’s authority.

President Obama in his speech emphasized that ongoing efforts to reform consumer financial protection should seek to implement new safeguards that “close gaps in regulation” and protect consumers who purchase financial products from certain predatory practices that have been attributed to generating the financial crisis. The President dismissed efforts in the business community to persuade Congress to reject the proposed legislation. Rather, the he noted that the agency will create a framework that will promote transparency and fair dealing of financial products. He also noted that the CFPA’s key mission should be to serve the financial interests of “ordinary Americans” by creating clear rules and regulations for both consumers and financial institutions. The CFPA will also assist small business entrepreneurs that often rely on credit cards and home equity loans for financing. President Obama stressed in his closing remarks that the U.S. financial system must adopt “regulatory reform that will reward innovation and competition instead of short-cuts and abuses,” and seek to enhance accountability and consumer protection.

Tomorrow morning the House Finance Services Committee will meet in a Full Committee session to mark-up the proposed draft of H.R. 3126.