Barney Frank Backs Consumer Protection Agency
WASHINGTON — The chairman of the House Financial Services Committee is throwing his weight behind President Barack Obama's plan to create a government agency to protect consumers from risky mortgages and credit cards, although some of his colleagues are skeptical of the details.
Rep. Barney Frank, D-Mass., said in a brief interview Wednesday that he plans to introduce legislation that would establish a "Consumer Financial Protection Agency."
Frank said his proposal would mostly track with Obama's plan but make some small changes. For example, Frank said his legislation would not give the agency jurisdiction to enforce a law aimed at expanding affordable housing in low-income areas, as Obama has suggested.
Frank said he does not believe the Community Reinvestment Act has enough of a consumer focus and would be difficult to peel away from other regulators.
The chairman's endorsement of the proposal came as other House Democrats joined Republicans in questioning the plan. Lawmakers who oversee the Federal Trade Commission said they were concerned the plan would weaken the FTC and suggested that the commission be given more resources instead.
Their remarks, while in contrast to Frank and other more powerful members of Congress who support the plan, suggest that Obama's goal of clamping down on the financial industry is easier said than done. Government turf battles, along with industry opposition, could threaten to slow the plan's enactment.
"I have more than a modest degree of skepticism regarding the administration's proposal," said Rep. John Dingell, D-Mich., at a hearing by the House Energy and Commerce subcommittee on trade and consumer protections.
The administration has reached out to lawmakers to lessen resistance to its plan. On Tuesday, Treasury Secretary Timothy Geithner attended an off-the-record dinner at the Washington Court Hotel with members of the House Financial Services Committee.
Rep. Paul Kanjorski, D-Pa., who hosted the dinner with Rep. Scott Garrett, R-N.J., estimated that some 30 members attended for a chance to talk to Geithner in an informal atmosphere.
Obama envisions the new agency as a single stop for regulating financial products for consumers in the same way other government agencies regulate the safety of drugs, food and toys.
The FTC already enforces consumer protection laws that apply to institutions other than banks, covering issues such as telemarketing fraud, Internet privacy and identity theft. The FTC also has a hand overseeing some financial providers, such as mortgage brokers, and has worked to shut down scams related to loan modifications and foreclosures.
Under the new plan, the FTC is expected to retain oversight of nonfinancial markets such telemarketing fraud but lose much of its oversight related to mortgage laws.
Rep. Bobby Rush, chairman of the subcommittee, said he disagrees with stripping the FTC of any of its current powers.
"Looking at all reliable indicators, the commission has performed commendably with a small and scrappy staff and abridged powers," said Rush, D-Ill.
Michael Barr, assistant secretary for financial institutions at the Treasury Department, said the shift in power is necessary to provide consistent oversight to mortgages throughout the life of the loan, from sale to payoff or foreclosure.
"We need one agency for one marketplace with one mission _ to protect consumers of financial products and services _ and the authority to achieve that mission," Barr said.
Nearly every member of the House panel told Barr that they had doubts. Republicans were the most blunt.
"They don't know how much they are going to spend. They don't know what resources they're going to need. And also they are going to be taking on expertise on areas they know nothing about that the Federal Trade Commission has years on," said Rep. Cliff Stearns, R-Fla.
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ANNE FLAHERTY | 07/ 8/09 04:00 PM |