Banks Balk at Agency Meant to Aid Consumers

New York Times
July 1, 2009
Andrews, Edmund L.
P. B1;

Mortgage lenders and independent mortgage brokers could join big banks such as JPMorgan Chase and Wells Fargo, as well as thousands of regional and local banks, in fighting President Obama's proposal to create a new consumer protection agency. The administration on June 30 unveiled a detailed proposal for a new regulator that would have broad powers over financial products -- such as the authority to set standards for conventional mortgages; restrict or prohibit risky loans, including those that come with hidden fees or heavy prepayment penalties; investigate lenders; and enforce new laws designed to protect credit card users. "This agency will have only one mission -- to protect consumers," declared Treasury Secretary Timothy Geithner. Consumer advocates and other backers insist that an independent and dedicated watchdog is critical to the crackdown on risky and deceptive financial practices. "It's obvious from the history of the last 20 years that the regulators never understood that protecting consumers is also a way of ensuring the safety and soundness of financial institutions," National Community Reinvestment Coalition President John Taylor stated. The call for reform will not be achieved without strong resistance from the industry, however. Intense lobbying has begun as the House Financial Services Committee works to complete a bill by the end of July.