The Country Needs the Consumer Financial Protection Agency
July 21, 2009 8:45 AM
House Financial Services Committee Chairman Barney Frank, (D-MA), has introduced a bill to create an independent agency to regulate financial services. The legislation, HR 3126, would consolidate many regulatory functions spread among other agencies and would give it the authority to make and enforce rules that would hopefully prevent another meltdown in the mortgage finance sector as well as address many other financial services practices that may be injuring consumers.Consolidation of the oversight of financial products that is now split between the Fed, the Securities and Exchange Commission, the Federal Trade Commission, and others can potentially improve regulatory efficiency substantially. It can also reverse the process of "regulatory capture" by the regulated industries that appears to have undermined the independence some of these agencies did have. However assuring that the oversight organization is free from political influence and staffed with competent professionals dedicated to protecting consumers is more important than where the authority resides. In designing the new institution we need to study the reason for regulatory failures at the Fed, SEC, OFHEO, and other agencies, and build protections against politicization into the new organization.
The American Homeowners Grassroots Alliance believes that the legislation is badly needed and also creates an opportunity to create more rigorous examination of other financial services areas that are badly in need of more oversight. For example the anticompetitive practices of many real estate services organizations are forcing real estate consumers to pay much higher real estate commissions than they pay in other developed countries. The new Consumer Financial Protection Agency should be given additional oversight of real estate services and the power to roll back industry and state regulations and laws that are stifling competition in real estate services and costing home buyers and sellers vast amounts of money.
