“Scaled back” CFPA
September 23, 2009 | federal legislation, industry | Comments (0)That’s the take in the wake of House Financial Services Chairman Barney Frank’s announcement yesterday. From the story:
The latest proposal for a Consumer Financial Protection Agency would no longer require financial institutions to offer a “plain vanilla” version of its products, such as a basic 30-year fixed rate mortgage. That would free lenders to concentrate on selling more sophisticated and expensive products.
The changes were proposed in a memo sent to Democratic members of the House Financial Services Committee on Tuesday evening by its chairman, Barney Frank.
The financial crisis sparked the idea for the agency, to make financial products safer for consumers. Advocates say such an agency could have prevented the subprime mortgage crisis and the resulting financial meltdown.
The agency would be able to examine and subpoena information from banks, while regulating financial tools such as mortgages and credit cards. Such an agency could determine the language on loan applications, how it’s presented and what the disclosure requirements are.
The new proposal would exempt non-bank businesses — such as merchants and retailers — from oversight. That means they could continue to offer customers tabs and layaway plans without facing a new layer of regulation, Frank’s memo said. Accountants, real estate brokers and agents also would be exempt.
When we find out what this means for the payday lending industry, we’ll let you know.
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