FOR IMMEDIATE RELEASE
ICBA: CFPA Bill Includes Improvements; But Further Changes Still Needed
Washington, D.C. (September 28, 2009)—The Independent Community Bankers of America (ICBA) today issued this statement following the release of draft legislation for the proposed Consumer Financial Protection Agency (CFPA) by House Financial Services Chairman Barney Frank (D-Mass.).
“Our nation’s more than 8,000 Main Street community banks agree that consumer protection is a cornerstone of our financial system and remain committed to serving their customers in cities and towns throughout America fairly and honestly. ICBA agrees that we need to close the existing regulatory gaps in our system and employ effective safeguards to protect consumers from improper and abusive practices. We appreciate the steps Chairman Frank has taken in the draft legislation to address community banks’ concerns with the proposed Consumer Financial Protection Agency.
“The draft CFPA bill has several meaningful improvements including eliminating the mandated plain vanilla product requirement and the vague ‘reasonableness’ standard. ICBA also appreciates that Chairman Frank has called for an assessment on nonbanks rather than placing additional unnecessary burdens on common-sense community banks that did not engage in the deceptive practices targeted by the proposal.
“However, to improve the bill, ICBA has also advocated for joint rulemaking between the banking regulators and the CFPA for consumer regulations. While the bill provides a role for the banking agencies through an advisory oversight board, the board lacks substantive authority over consumer regulations. To truly protect consumers and promote a healthy and vibrant financial system, genuine coordination of safety and soundness and consumer protection goals is needed.
“ICBA feels strongly that examination and enforcement authority should be retained by the bank regulatory agencies and is very disappointed that the new draft does not reflect that change. For community banks, safety and soundness and consumer protection are not mutually exclusive functions and bank regulators have the expertise to balance the two. The CFPA should focus on and have strong authority over the currently unregulated or lightly regulated nonbank financial entities.
“Community bankers believe the best way to protect consumers is to end the too-big-to-fail concentration risks. ICBA looks forward to working with the Committee and Congress as regulatory reform efforts move forward to ensure that reform works for the long term to protect consumers and strengthen our financial system and Main Street community banks.”