When the economy was growing, banks doled out credit to consumers as fresh. People who could never afford to live his dream of adjustable rate mortgages were the option of payment loans and other easy-access only a signature away. Credit cards for payment of the pain away for another day - never deal with charges hidden in fine print.
On Wednesday, President Obama props create a federal agency requiring banks, mortgage lenders and the credit card companies provide consumers with more nutritious diet, speaking financially.
But what is good for consumers can not always squads with that are good for banks. And the industry of banking - saying that it is to lose billions of dollars - is helping to fight the plan because of the administration to review the way the industry is covered head to Capitol Hill.
The banks really dumbfounded by the space agency, Edward L. Yingling, president of the American Bankers Association, said. Not like the current regulator does not have all the authority they need. You do not have to blast the system.
The agency’s financial consumer protection is the idea of Elizabeth Warren, a professor of law school at Harvard to come to prominence in the consumer field after years of studying the toll the flow of consumer. Discusses the banking regulators, have an inherent conflict of interest between ensuring safety and fairness of institutions and the protection of consumers.
If the administration gets its way, the agency, a lot of the Agency of Medicines and Food for financial products, is authorized to order banks to tell their offers and to make sure consumers have the information they need to make sound financial decisions, the be protected from the tricks.
Could, among other things, dictate standards for some products before the banks could bring to market and pushing banks to encourage lending on the plain vanilla one more exotic mortgage loans, which could be required to load notices. The unfair terms and practices between shippers credit card would be removed also weeds out.
If Congress approves the agency would be the first time that consumers have a seat at the table of the banking regulator.
The argument for doing this is you have an agency that is focused only on consumer protection, said Donald G. Ogilvie, president of the center of Deloitte’s banking solutions. The argument against is that you have an agency that is only interested in consumer protection.
But also sets up - a battle over turf between the potential of the myriad agencies that are currently charged with consumer protection, including the office of Thrift supervision of the office’s tax money and Federal Reserve, which banks would like to do keep this neglect.
The groups are banking on these costs to a new layer of regulation could, and the prospect of more examiners who are isolated in their seats.
You’re talking about an agency that is authorized financial products and design, to say in fact that should be offered first on the banks own products, said Mr. Yingling.
In an interview on Wednesday, Mrs. Warren said the new agency could have implications beyond the protection to the consumer. Protect consumers from hazardous products ultimately protects the entire financial system, discussed.
This crisis started a mortgage at a time, Mrs. Warren said that, as president of the congressional panel that oversees the state charges in financial aid, has the ear of many legislators. The products that were ill household sold by families destabilized not only the household. When they were cut and cut and passed along with the mortgage-backed securities, increased the risk throughout the economy.
The agency most likely would be very hard on banks that benefit from high-risk products, Mrs. Warren said. But it may benefit banks that offer the most consumer-friendly products that are lost in the storm of the invitation for some products more risky, he said.
When the banks to encourage wet - under the powers of the agency proposing the conference, the devil is in the details. An important question is how the agency would be financed. A speaker for the Treasury said it would be paid for in part through fees assessed to entities and transactions through the financial sector. Was not more specific, there could be some conflict of interest if, for example, banks pay fees directly to the agency to seek approval for their products.
The other issue is the division between the state and federal power. The attorneys general of the state are often split down in the mortgage fraud in the high rates of credit card in the payday loan and other financial issues of protection of the consumer that the new agency pegaria. Mr. Yingling of the American Bankers Association expressed the interest that financial companies could receive unequal treatment in state and national level.
It can also be difficult to separate consumers of the shareholders, leaving uncertainty about whether some financial products fall within the scope of the new agency or the Securities and Stock Exchange Commission, which monitors many products of the shareholder. A speaker for the Treasury said the SEC would retain its power over the protection of the shareholder.
The president’s proposal is similar to legislation introduced a few months ago by Senator Richard J. Durbin, Democrat of Illinois. Recognized the idea of an agency faced a fight on Capitol Hill.
