- The Washington Times - Thursday, October 1, 2009

House Democrats moved closer Wednesday to adopting President Obama’s plan for a new regulatory agency designed to protect consumers from unscrupulous financial deals, despite opposition by Republicans and Wall Street.

House Financial Services Committee Chairman Barney Frank said he plans to prepare a final draft for the legislation the week of Oct. 12, promising that the new agency would offer greater protections for mortgages, credit cards and loans by establishing simpler and more transparent rules and regulations.

The proposed Consumer Financial Protection Agency (CFPA) would strip consumer regulatory powers from the Federal Reserve, which Mr. Frank accused of “lackadaisical” enforcement.

“I think it’s fair to say that no calluses will be found on the hands of those in the federal regulatory agencies who have consumer responsibilities, because there is no evidence of any particular hard work,” Mr. Frank said during a committee hearing.

The Massachusetts Democrat initially had wanted the committee to clear the bill before the August congressional recess but agreed to postpone a vote amid concerns from moderates in his own party.

Republicans and financial institutions argue that tighter controls and more regulations would stifle investments and innovation in the financial world and possibly slow down the flow of capital through the markets, a scenario blamed for last year’s Wall Street meltdown.

Rep. Spencer Bachus, the Financial Services Committee’s top Republican, said that although he agrees that industry reforms are needed, the CFPA as proposed by Mr. Frank and the president could create “more confusion for consumers, more government spending, less access to credit and less consumer protection.”

The Alabama lawmaker said consolidating regulatory powers currently spread out over many agencies - not creating a new bureaucracy - would better serve consumers.

“Americans want better tools to make sound financial decisions and stronger enforcement of consumer protection laws, not another government agency to add to the regulatory alphabet soup that characterizes the current structure,” he said.

Some Democrats also want changes to the proposal. Rep. Melissa Bean of Illinois said she plans to offer an amendment, with input from other Democrats, that would allow federally chartered banks to follow federal regulations under the CFPA and ignore state laws.

Mr. Obama’s proposal calls for giving states a role in regulating large financial institutions that operate nationwide. But Mrs. Bean said it would be more practical and less expensive not to force the banks to comply with 50 different regulatory regimes.

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