How the Consumer Financial Protection Agency Act of 2009 Would Change the Law and Regulation of Consumer Financial Products

Bloomberg Law Reports: Risk and Compliance, Vol. 2, No. 10, October 2009

George Mason Law & Economics Research Paper No. 09-51

12 Pages Posted: 20 Oct 2009

See all articles by David S. Evans

David S. Evans

Market Platform Dynamics; Berkeley Research Group, LLC

Joshua D. Wright

Lodestar Law and Economics

Date Written: October 19, 2009

Abstract

As part of its overhaul of financial services regulation the Obama Administration has proposed stronger protection of consumers of financial products and services. The Consumer Financial Protection Agency Act of 2009 (CFPA Act), which the Administration submitted to the U.S. Congress on June 30, 2009, would result in a sweeping overhaul of consumer financial protection. The CFPA Act would create a Consumer Financial Protection Agency (CFPA) which would assume the responsibility for enforcing most existing consumer financial protection laws from other federal banking regulators as well as the Federal Trade Commission. The CFPA would have significant additional powers to regulate consumer financial products, mandate disclosures, and require covered businesses to offer consumers "plain vanilla" products that the CFPA would design. The legislation would limit federal preemption of nationally chartered financial institutions by allowing states and localities to have stronger restrictions than those adopted by the CFPA and would add a new prohibition against "abusive" practices while allowing new interpretations of existing liability for unfair and deceptive practices. This article details how the CFPA Act would change consumer financial regulation, explores the policy rationale for these changes, and examines how the legislation, if enacted in its current form, would affect providers and consumers of financial products and services.

Keywords: behavioral economics, borrowing, consumer protection, credit cards, Elizabeth Warren, FDIC, Federal Reserve Board, financial crisis, Michael Barr, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, Oren Bar-Gill, Truth-in-Lending Act

JEL Classification: D11, D12, D18, E51, E53, E60, E62, G20, G28

Suggested Citation

Evans, David S. and Wright, Joshua D., How the Consumer Financial Protection Agency Act of 2009 Would Change the Law and Regulation of Consumer Financial Products (October 19, 2009). Bloomberg Law Reports: Risk and Compliance, Vol. 2, No. 10, October 2009, George Mason Law & Economics Research Paper No. 09-51, Available at SSRN: https://ssrn.com/abstract=1491117

David S. Evans

Market Platform Dynamics ( email )

140 South Dearborn St.
Chicago, IL 60603
United States

Berkeley Research Group, LLC ( email )

99 High St.
Boston, MA 02110
United States

HOME PAGE: http://davidsevans.org

Joshua D. Wright (Contact Author)

Lodestar Law and Economics ( email )

P.O. Box 751
Mclean, VA 22101
United States

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