- In Time for Holidays: More Gloom and Doom on Economy
- Turkey Day 101: How Well Do You Know Your Bird?
- US Home Prices Up 5th Month, 2nd Straight Quarter
- Holiday Guide to This Season's Smartphones
- Six Ways to Boost Your Income in a Big Way
- Buyers Look for Bargains at Luxury Condo Auction
- Ron Paul's Plan to Audit Fed a 'Serious Attack': Mishkin
- GM's Agreement to Sell Saab Unit Falls Apart
- Strong Banks, Weak Credit: Treasury Rethinks TARP
- Nov. 24: Unusual Volume Leaders
- NBA D-League On The Rise
- 3D's Tipping Point and Your Living Room
- On Twitter, Beware False Prophets
- My 2010 Home Price Outlook: UBS Analyst
- Why Are Options Piling into Dollar Tree?
- Novartis 'Cells' Its Flu Vaccine Technology
- Silicon Valley and Hollywood Now Fast Friends
- Markets Can Rise 5-10% in the Near-Term: Strategist
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- US Home Prices Up 5th Month, 2nd Straight Quarter
- GM's Agreement to Sell Saab To Swedish Firm Falls Apart
- Buyers Look For Bargains At Luxury Condo Auction
- FDIC Fund Falls into The Red, Bair Urges Lending
- Just In Time for Holidays: More Gloom and Doom on Economy
- CA "More Profitable" After Saving Energy: CEO
- 10 Holiday Cocktail Recipes from Top Mixologists
- Behind The Scenes With Warren Buffett
Text Size 
The Obama administration has proposed a Consumer Financial Protection Agency (CFPA) that would regulate the fees, penalties, and interest rates for consumer products such as credit cards and mortgages. The administration believes this new agency could enforce disclosure, but do American consumers really need a new layer of regulation?
Opponents like Reuters Money & Politics columnist James Pethokoukis say no, arguing there are many negative externalities related to the credit regulation that comes with the proposal. Under this "extremely elitist" plan, the cost of credit will rise and people will have to pay more for mortgages than they should, Pethokoukis said.
"This bill treats people as if disclosure is not enough, that people [can't be educated]. Even if you have great disclosure requirements (if you're a financial institution), you can still be sued if people still end up in the wrong investment," Pethokoukis said.
One group may end up very happy if the proposal is approved. Pethokoukis said this will be a gold mine for attorneys.
In a nutshell, the administration's proposal would permit educated consumers to utilize any financial service they want while restricting the number of goods available to the average consumer.
That's good news according to Connecticut Attorney General Richard Blumenthal, who thinks the CFPA could compound existing financial service regulators and authorities so they can be more effective for the consumer.
Related Links:
- Obama Administration Seeks More SEC Investor Protection
- Rep. Frank Introduces US Consumer Agency Bill
- Banks Stronger But Outlook Is Clouded by Jobs: Whitney
"Neither the FTC nor any of the other federal agencies has really been an effective watchdog," Blumenthal told CNBC. "And what we need here, as much as anything else, is full disclosure transparency, intelligible and understandable pitches and promotions, and documents for consumers so they know what they are committing to do."
The present financial protection system has not been working, according to Blumenthal. The new regulatory agency would have the authority over banks and be permitted to develop criterion for all consumer financial services and goods.
The Senate Banking Committee holds a big hearing Tuesday to debate the Consumer Financial Protection Agency. Consumer protection in the US normally concentrates on disclosure. The assumption has been that with sufficient disclosure, all consumers could make rational conclusions about goods and services presented to them.
Print
Email
- Remember when auto shows were major events where new models could generate buzz?
- CNBC’s Mike Huckman visits a cutting-edge plant to see how the flu vaccine of the future is being made.
- A new McDonald's in Manhattan is the nation's first to sport a sleek, chic interior imported from stores in London and Paris.
- Italians were outraged by a minister's comments that lunchbreaks are bad for waistlines and the economy.
- Playboy will outsource its publishing operations in a bid to become profitable again.
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
Data is a real-time snapshot *Data is delayed at least 15 minutes