Obama’s Consumer Finance Plan Stirs Turf Tussle

The Obama administration’s proposal to create a consumer money watchdog may get roughed up a bit in Capitol Hill turf battles.

The administration propsed creating an independent Consumer Financial Protection Agency to look out for users of such financial products as credit cards and mortgages.


The proposal would strip some authority from the Federal Trade Commission (FTC).

On Capitol Hill, one measure of a committee’s clout is the range of executive branch functions that panel oversees. Take authority away from the FTC, and that takes some power away from the committee that keeps watch over the FTC.

Obama’s proposal will be vetted not by the Energy and Commerce Committee, which has jurisdiction over the FTC, but by the Financial Services Committee.

Rep. John D. Dingell , D-Mich., who was ousted as committee chairman in November after 27 years as the top Democrat on Energy and Commerce, views the Obama proposal as an “unwarranted reassignment of FTC’s authority” and the decision to give the bill to Financial Services a raid on Energy and Commerce’s jurisdiction.

“I have significant concerns about these plans,” he said last week.

While not going as far as Dingell, Democrat Bobby L. Rush of Illinois said he was concerned that the new agency would not do enough for consumers in the short term. Rush, the chairman of the Subcommittee on Commerce, Trade and Consumer Protection, suggested the administration could instead give the FTC authority to regulate financial consumer products.

Michael Barr, assistant Treasury secretary for financial institutions, said the existing oversight structure was inadequate to take on greater responsibility.

“Our basic view is that the current system is fundamentally broken. We need to have one agency for one marketplace with one mission,” he said.

The Financial Services Committee, headed by Barney Frank , D-Mass., has taken the lead on the legislation authorizing the new agency and is expected to have a version ready for committee action before lawmakers leave town at the end of July.

The Energy and Commerce Committee could slow down the bill’s progress by insisting on its right to act on the portions dealing with changes to the FTC’s authority.

The FTC oversees consumer protection issues, including unfair and deceptive advertising, telemarketing and identity theft. Under current law, it can bring enforcement actions against non-bank financial entities, such as mortgage brokers and finance companies. However, banks, savings and loan institutions and credit unions are exempt from FTC oversight.

Source: cqpolitics.com