The new agency to regulate financial services products would be able to levy fines, subpoena information and consolidate consumer protection in one place, according to a draft of the legislation released today by the Treasury Department.
The agency will have supervisory and examination powers over all organizations that issue financial products, Assistant Secretary of the Treasury Michael Barr told reporters in a briefing. It will be funded by both congressional funding and fees from institutions being regulated.
He singled out credit unions as among the institutions that will benefit.
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"If you are a community bank or credit union, the last thing you want to do is compete against entities that aren't regulated," he said. "When you talk to credit unions, they look at the products [such as certain subprime loans] that were offered by others and those weren't the type of products that credit unions got into the business to offer."
Currently, each agency that regulates financial institutions-such as the NCUA-is also empowered to enforce consumer protection laws.
Barr said the new agency-the Consumer Financial Protection Agency-will "level the playing field across the financial sector."
The legislation, which will be considered by the House and then the Senate, spells out a key component of the plan to overhaul financial regulation that the Obama administration unveiled on June 17.
CUNA has said it is taking a wait-and-see approach on the legislation. NAFCU has proposed an alternative that would restrict the agency to regulating those institutions not already regulated by an existing agency and beef up the consumer protection staffs.
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