Yesterday, House Financial Services Committee Chairman Barney Frank (D-MA.), joined by twelve cosponsors,* introduced H.R. 3126, the "Consumer Protection Financial Agency Act of 2009," which would, as its name implies, establish a new Consumer Financial Protection Agency (CFPA). The CFPA would be a powerful independent agency that would combine all of the consumer protection authority of current federal financial institution regulators in order to provide better protection for consumers who purchase financial products from banks and non-bank financial institutions.

The proposed legislation was the formal introduction of President Obama’s plan to strengthen consumer protection as part of the overall restructuring of financial regulation, but H.R. 3126 differs from the proposed Obama plan in two ways. First, the proposed legislation maintains the current role for federal banking regulators in administering and enforcing the Community Reinvestment Act, which requires banks to provide credit and other retail banking services in underserved areas. Second, the proposed legislation continues to reference the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) rather than a newly created regulator to be known as the National Bank Supervisor (NBS), which would effectively consolidate the OCC and OTS. If enacted, Congressman Frank believes that the bill will “provide greater consumer protections while in no way burdening the legitimate activities of responsible banking.”

* The twelve cosponsors include Reps. Maxine Waters (D-CA), Carolyn Maloney (D-NY), Luis Gutierrez (D-IL), Mel Watt (D-NC), Gary Ackerman (D-NY), Brad Sherman (D-CA), Michael Capuano (D-MA), Brad Miller (D-NC), Al Green (D-TX), Keith Ellison (D-MN), Jackie Speier (D-CA), and Alan Grayson (D-FL).