Consumer Financial Protection Agency Debated in Congress

As Barney Frank’s Financial Services Bill (H.R. 4173) comes to the floor in the House of Representatives this week, one closely watched possible addition is the Minnick Amendment

Sponsored by Rep. Walt Minnick (D-Idaho), the Minnick Amendment would eliminate the proposed Consumer Financial Protection Agency (CFPA) and replace it with a council of existing regulators that would focus on consumer protection.  While, as of Wednesday night, it remains unclear whether the amendment will come to the floor, it would substantially change the bill.

The amendment is supported by Centrist Democrats, who are wary of the scope of powers under the CFPA. The ICBA (Independent Community Bankers of America) is encouraging Minnick to pursue the amendment while remaining non-committal.  The ABA (American Bankers Association) meanwhile has come out against the bill as a whole.

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As debate continues, it will be interesting to see what will happen to the CFPA, an agency that, if created, would have oversight over the real estate and mortgage industry and beyond.  The agency would also work on creating uniform “consumer friendly” disclosures, including a combined “good faith estimates” and truth-in-lending statement.  As a result, it is likely to have an effect on the reverse mortgage industry, both directly and indirectly. For more information on what the CFPA might look like, see the overview of the proposal in The LATimes

While the National Reverse Mortgage Lenders Association (NRMLA) has no comment on the bill at this time, NRMLA President Peter Bell emailed RMD to say that, “we have been actively engaged in consultation with Congressional staff to assure that provisions in H.R. 1728 that have been rolled into the bigger bill can work properly with reverse mortgages.”

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  • It would probably be the lesser of two evils, and probably cost less. True collaboration among these agencies, not turf guarding, could be constructive in theory.

  • If you think things are bad now, want until we have an accountability to an agency or collection of “turf guarding” (thanks for the phrase, dduck12) representatives of various agencies that have no idea what HECMs are or what their safeguards actually entail. I would have hoped both the MBA and NRMLA would have sided with the ABA on this matter. The positions of the MBA and NRMLA are truly disappointing.

    • In my naive way, I was sort of hoping for a meeting of the minds to develop an inter-agency common sense (chuckle) way to protect seniors from predators (family members, salespeople, etc.), not just regarding RMs but all other areas. I also believe in the Easter bunny.

  • I seriously doubt that reverse mortgages are very much on the minds of those members of the House who have been working on or debating the bill that would create the CFPA. Perhaps the attention of a few staffers can be gotten to assure there will be no unintended adverse consequences for RMs and the companies that originate them.

    The responsibilities of the new CFPA would be duplicative of a number of existing agencies, which would be stripped of some their turf. The intent of the Minnick amendment is admirable (why create an entirely new bureaucracy?); however, in my mind, the powers intended for CFPA should be vested in a single, existing Executive Branch department or agency, which means not the Fed (which is not part of the Executive Branch).

    • HECM_Dude,

      Good legislative ideas usually end up with less than desirable results. Idealism is fine but it rarely pans out. HERA should have made that clear. The original idea was to modernize FHA – a good idea – but then it ended up with our seeing maximum origination fees reduced – less than desirable results.

      If you did not believe that any person in Congress had us in mind, please read the amendment to the CFPA legislation which is presented in today’s RMD article (12/11/2009) which was posted just minutes before you made this post. On legislative matters it is better not to be quite so naïveté.

  • HECM_Dude,

    Good legislative ideas usually end up with less than desirable results. Idealism is fine but it rarely pans out. HERA should have made that clear. The original idea was to modernize FHA – a good idea – but then it ended up with our seeing maximum origination fees reduced – less than desirable results.

    If you did not believe that any person in Congress had us in mind, please read the amendment to the CFPA legislation which is presented in today’s RMD article (12/11/2009) which was posted just minutes before you made this post. On legislative matters it is better not to be quite so naïveté.

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