Frank Wants to Limit Financial Institutions Affected by Obama Reform Legislation
House Financial Services Chairman Barney Frank (D-Mass.) signaled Tuesday that he is moving to limit the scope of institutions affected by the proposed Consumer Financial Protection Agency.
In a memo to all Democratic members of the Financial Services panel obtained by Roll Call, Frank, who is expected to release draft language of his financial reform bill shortly, laid out 10 key areas he wants to change in the Obama administration’s draft legislation.
Frank wrote that the changes were being made to “make clear that CFPA will not disrupt merchants, retailers and other nonfinancial businesses or subject banks and other depository institutions to needless additional regulatory burdens and costs.—
Banking lobbyists cheered the move to narrow the scope of the new agency, but were still hesitant about the future of the CFPA.
“The clarifications will reduce uncertainty over the breadth of the CFPA, but we still oppose creating a new, separate regulator,— said Scott Talbott of the Financial Services Roundtable.
Frank’s bill would exempt nonfinancial institutions like merchants and retailers and businesses that provide services like telephone, cable, and Internet. Accountants, real estate brokers and agents, lawyers, and auto dealers would also not fall under the purview of the regulatory agency.
Additionally, there would be no “reasonableness— standard that would be placed on financial institutions. Non-bank financial institutions would be required to register with the agency, but would not be held to a higher level of scrutiny. Frank also mapped out the agency structure, saying it would be run by a single director with an oversight board that would be composed of the federal banking agencies, the National Credit Union Administration, the Federal Trade Commission, the Department of Housing and Urban Development, and the chairman of the State Liaison Committee of the Federal Financial Institutions Examination Council.