This article was originally published 7 July, 2009
On June 30, 2009, the Obama administration released proposed legislation (the "Consumer Financial Protection Agency Act," or, the "CFPA Act") that would create an independent federal agency, the Consumer Financial Protection Agency (the "Agency"), to regulate the provision of financial products and services to consumers. This is the administration's first legislative proposal to implement the financial regulatory reform plan (the "Financial Reform Plan") that it released on June 17, 2009. The proposed legislation contains sweeping changes that would fundamentally reshape consumer protection regulation of many financial products and services. This update summarizes key provisions of the CFPA Act, which include delegation of nearly unlimited authority to the Agency, a drastic roll-back of preemption of State law for federally chartered banks, and potentially significant new consequences for violation of the law.
Structure and Jurisdiction of the Agency
Under the CFPA Act, the Agency would be administered by a five-person board, which would include four presidentially appointed members (one of them the Director) and the director of the National Bank Supervisor. The board members are required to have "strong competencies and experiences related to consumer financial products or services" but, unlike other agency boards of directors, there is no provision in the CFPA Act requiring board members from different political parties.
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