{"id":359415,"date":"2010-02-24T18:34:13","date_gmt":"2010-02-24T23:34:13","guid":{"rendered":"http:\/\/www.szone.us\/f95\/consumer-financial-protection-thinking-outside-boxes-39952\/"},"modified":"2010-02-24T18:34:13","modified_gmt":"2010-02-24T23:34:13","slug":"consumer-financial-protection-thinking-outside-the-boxes","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/359415","title":{"rendered":"Consumer Financial Protection: Thinking Outside the Boxes"},"content":{"rendered":"
On 02.24.10 12:01 PM posted by James Gattuso<\/p>\n

Is a congressional compromise on financial services regulation in the works? Steven Pearlstein of the Washington Post today <ahref="http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2010\/02\/23\/AR2010022305097.html?hpid=topnews">reports the answer is “yes,” citing progress in negotiations between Democratic Sen. Chris Dodd of Connecticut and GOP Sen. Bob Corker of Tennessee. Specifically, Pearlstein points to a breakthrough on one of the major sticking points of the debate: whether to create a new agency to enforce consumer protection laws in financial service markets.<\/p>\n

As described, the compromise proposal may alleviate many of the potential organizational objections to the idea. Nevertheless, the new regulator could hurt — rather than help — consumers.<\/p>\n

The creation of an independent super-agency dedicated soley to consumer regulation has been a centerpiece of President Obama’s financial regulation agenda. But, while it was approved last summer by the House, the idea has languished in the Senate, as opponents have <ahref="http:\/\/www.heritage.org\/Research\/Regulation\/bg2314.cfm">pointed out that a consumer regulation agency independent of other banking regulators would foster confusion and bureaucratic infighting, and actually undermine efforts to assure the safety and soundness of banks.
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\n According to Pearlstein, Dodd and at least one Republican — Corker — have come up with an alternative: a single regulator with two divisions, one to enforce consumer protection laws, and the other to look after the safety and soundness of financial institutions.<\/p>\n

The idea seems to address the organizational objections to the plan — facilitating coordination between the two roles. But before the champagne is uncorked, negotiators should take a step back — there are still many more troubling questions about this new regulator that have not been answered.<\/p>\n

One is how extensive its scope will be. Will it regulate only banks with a national charter or financial institutions more generally, as Obama proposed? “Financial services” is a broad term, and could include virtually anything not sold with cash on the barrelhead. If jurisdiction is broad, the new agency could have a dangerously unlimited reach. An agency with broad jurisdiction could also undermine the work of other agencies, particularly the <ahref="http:\/\/www.ftc.gov\/speeches\/kovacic\/090728stmtrecord.pdf">Federal Trade Commission, which has broad responsibility and expertise in consumer protection.<\/p>\n

Even more important is what (if any) new powers the agency will have. It’s one thing to gather in one place the existing — and entirely sufficient — powers now held by a variety of other financial services regulators. But Sen. Dodd (and President Obama) have proposed to confer vast new powers on the regulator as well, including ill-defined authority to regulate “unfair” practices, limit sales practices, restrict advertising and more.<\/p>\n

Such new powers are not only <ahref="http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=1474006&rec=1&srcabs=148390 6">unnecessary, but harmful — limiting innovation and choice, and raising costs for the very consumers they are meant to protect.<\/p>\n

As negotiations on these complex issues move forward, Congress should move with care and check the details. Containing the dangers of new regulation is not just a matter of organizational boxes.<\/p>\n

http:\/\/blog.heritage.org\/2010\/02\/24\/…ide-the-boxes\/<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

On 02.24.10 12:01 PM posted by James Gattuso Is a congressional compromise on financial services regulation in the works? Steven Pearlstein of the Washington Post today <ahref="http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2010\/02\/23\/AR2010022305097.html?hpid=topnews">reports the answer is “yes,” citing progress in negotiations between Democratic Sen. Chris Dodd of Connecticut and GOP Sen. Bob Corker of Tennessee. Specifically, Pearlstein points to a breakthrough […]<\/p>\n","protected":false},"author":4292,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-359415","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/359415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4292"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=359415"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/359415\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=359415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=359415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=359415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}