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July 27, 2009 - Chairman of the House Financial Services Committee Barney Frank (D-Mass.) told an audience at the National Press Club in Washington, D.C. on July 27 that he was certain the House will pass regulatory reform legislation for the Senate to consider by this fall.
“We [Democrats] have a responsibility to develop a system that allows financial institutions to thrive, but also protects consumers against abuses,” said Frank. “We are going to do this. I am confident we will meet this responsibility.”
The Chairman highlighted five main elements of regulatory reform: limits on securitization and leveraging, setting resolution authority, containing derivatives, protecting consumers and addressing executive compensation. Frank explained that H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act of 2009, the legislation to establish a separate consumer protection agency has the support to pass the House as a part of the Committee’s regulatory reform initiatives.
The CFPA would establish a federal standard for consumer protection as “a floor and not a ceiling” allowing states with stronger consumer protection rules to continue to enforce those rules, as well as the federal standard. In those states where the rules are inconsistent, however, the state law would be preempted. Frank stated that he thinks the CFPA will share responsibilities among the federal and state regulators, especially in the monitoring of entities such as payday lenders and check cashers. NASCUS has formed a task force to study H.R. 3126’s impact on the state credit union system, and the legislation will be discussed during NASCUS' leadership meetings in August.
Chairman Frank also commented on “too big to fail” institutions and explained that the proposed idea of creating a list of systemically important institutions was not likely and could possibly have a negative impact on the economy.
To read more about the House Financial Services Committee’s regulatory reform initiatives, follow this link to its website.
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