Tuesday, October 20, 2009

Consumer Financial Protection Agency (“CFPA”) moves forward today: to pre-empt or not to pre-empt?

The House Financial Services Committee meets again today to mark-up draft legislation on the Consumer Financial Protection Agency (“CFPA”). The hearing is scheduled at 2pm EST and a live webcast is available here. I have blawgged about the CFPA here and arguing for allowing continued pre-emption; here’s a public policy paper arguing against continued pre-emption.

Recall last week the Committee created significant news for having adopted the Miller-Moore Amendment, which exempts “small” banks and credit unions from CFPA annual examinations. (Where “small” is defined as banks with assets less than $10 billion and credit unions with assets less than $1.5 billion). The Miller-Moore exemption actually eliminates the annual examination for 8,000 of 8,200 banks (or, 98% of American banks). Per the American dream, however, that big bank 2% actually holds 80% of national banks assets, or $11.2 trillion. Bottomline: CFPA would still write rules for all banking institutions, and could investigate a consumer complaint against any bank of any size. (The headlines last week indicating the Committee had caved to special interests were largely overdone - shocker ... The amendment only exempts small banks and credit unions from annual examinations).

Photo credit: Brendan Smialowski via NYTimes.

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