consumer protectionA year ago, in my “About” statement, I said that I thought we had a choice between “Fair” and “Free.”  Will we be free to pursue our dreams or will we be restricted in what we do in order to make certain that no one is discriminated against or subjected to “unfair” treatment?  I still think we face that choice and it was brought home to me by a recent reading of the Obama Administration’s new proposal to Congress for a Consumer Financial Protection Agency.

In case you hadn’t noticed through the smoke screen of the “Health Care Debate,” Mr. Obama has proposed the creation of a new agency, a HUGE new agency.  It would, without replacing them, add further structure (more bureaucrats) and new layers of regulation and enforcement to the financial sector.  The proposed Consumer Financial Protection Agency (CFPA) would absorb many of the mandates (those related to consumer protection) of the:

Controller of the Currency; the Office of Thrift Supervision; FDIC;  Federal Trade Commission;  National Credit Union Administration;  etc.

It would turn over investigation and enforcement of the following consumer laws to this new agency:

(A) the Alternative Mortgage Transaction Parity Act (12 U.S.C. 3801 et seq.);

(B) the Community Reinvestment Act (12 U.S.C. 2901 et seq.);

(C) the Consumer Leasing Act (15 U.S.C. 1667 et seq.);

(D) the Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.);

(E) the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.);

(F) the Fair Credit Billing Act (15 U.S.C. 1666-1666j);

(G) the Fair Credit Reporting Act except with respect to sections 615(e), 624, and 628 (15 U.S.C. 1681m(e), 1681s-3, 1681w); 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23;

(H) the Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.);

(I) the Federal Deposit Insurance Act, subsections 43(c) through (f) (12 U.S.C. 1831t(c)-(f));

(J) the Gramm-Leach-Bliley Act, sections 502 through 509 (15 U.S.C. 6802-6809);

(K) the Home Mortgage Disclosure Act (12 U.S.C. 2801 et seq.);

(L) the Home Ownership and Equity Protection Act (15 U.S.C. 1639);

(M) the Real Estate Settlement Procedures Act (12 U.S.C. 2601-2610);

(N) the S.A.F.E. Mortgage Licensing Act (12 U.S.C. 5101-5116);

(O) the Truth in Lending Act (15 U.S.C. 1601 et seq.); and

(P) the Truth in Savings Act (12 U.S.C. 4301 et seq.).

It would also enforce the terms of a myriad of other controlling laws and regulations, like the Securities Exchange Act of 1934, the Investment Advisors Act of 1940, and the Investment Company Act of 1940.

We are told that the sole purpose of this Act is to protect consumers while leveling the playing field for all.  I am always leery when I hear that a law will “level the playing field.”  That normally means one person will be restricted (lose freedoms) so that another person can be treated more fairly (be given competitive advantages).  Mr. Obama’s surrogates are saying this will bring competition to the credit card business so that consumers will have better choices.  It may just be that Mr. Obama has a better sense of humor than I thought, but, how can that be anything but a joke when there are over 6000 credit card issuers in the U.S. right now.  And, by regulating them more, we will see more competition?

I am also concerned that the Agency will be guided by a Board of 5 members, four appointed by the President for 5 years (Senate consent) plus the Director of the National Bank Supervisor (another new position and new agency yet to be codified in the Law).  It appears to me that this will put appointed bureaucrats in complete control of the country’s financial system and the controlling parties will be selected by a Democrat President and a Democrat controlled Congress.  Though their purpose may seem to be to help protect consumers, it certainly has the look of a takeover of our financial institutions – step two, after buying the banks and financial firms with TARP money.

bureaucracyThough I have scanned all and read much of the 152 page Act sent to Congress by Mr. Obama earlier in the week, I still have MANY QUESTIONS.

Why doesn’t this new agency replace any of the the agencies it will now oversee and control?

How much will this cost us?  The Bill mentions that the new Agency will get personnel transferred from each of the existing agencies it will oversee/overlap with, but I see no limitations on its size or cost.  The direct cost of another huge agency will likely run into the $ Billions each year.  But what will be the cost of all the new regulation and enforcement to consumers?

If we do have a serious problem with financial institutions, is this the best fix?

Why does almost every solution coming out of Washington, D.C. require a new agency?

I hope there are some reporters out there who will investigate this proposed law and that someone in the media will start telling us more about it.  I fear that under the cover of the war over health care, this will just slide by and we will soon be funding a new agency to the tune of Billions of Dollars a year and indirectly through more Billions in compliance costs.

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