The creation of an independent Consumer Financial Protection Agency (CFPA) would not impair safety and soundness regulation of banks, according to a majority of business economists.
A survey by the National Association of Business Economists found 54% of economists are dismissive of claims by the banking industry and their supporters in Congress that a CFPA would undermine S&S regulation. A quarter (25%) of the 203 economists believes passage of CFPA legislation would be detrimental to S&S.
The House has passed a bill that would create a stand-alone agency with rulemaking and enforcement powers to stop abusive mortgage lending and credit card practices. Such a strong consumer protection agency has run into fierce opposition in the Senate where banking committee members are trying to wrap up negotiations on a massive financial regulatory reform bill.
House Financial Services Committee chairman Barney Frank told a meeting of minority real estate professionals that CFPA opponents seem to be arguing that consumer protection will hurt banks. "There are people who believe if the banks aren't able to treat consumers unfairly they can't survive," Frank said.
