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CFPA talking points

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					1. What is the Consumer Financial Protection Agency (CFPA)?

The proposed new federal agency would combine the current role of several existing
agencies and create a new agency for the purpose of providing financial protection to
consumers.

2. Who is supporting the CFPA?

President Barack Obama initially proposed the new government agency and Rep. Barney
Frank D-MA has passed the legislation, HR 3126, out of his committee.

3. What authority would this agency have?

This legislation is drafted so broadly that this new agency will have almost unlimited
power when it comes to regulating mortgage and credit card loan terms. “Financial
transactions falling under the agency's jurisdiction would include mortgages, credit cards,
student loans, auto loans, payday loans, and more.”1

“H.R. 3126 would create a new bureaucracy run by five unelected individuals appointed
by the president. ... This agency would possess sweeping powers to ban or modify any
home mortgage, credit card, personal loan or other 'consumer financial product' it
subjectively deems to be 'unfair' or 'abusive.' If the mortgage that would allow you to be a
homeowner is deemed 'unfair,' you'd better find another one. If the credit card you choose
for your family is 'abusive,' you might find yourself paying cash."2

4. How will the CFPA affect the economy?

In order to fund this new agency the government will have to raise taxes and fees on
consumers. However, the larger problem will be reduced lending to consumers and small
business owners as lenders pull-back. The proposed agency will make it more difficult to
lend money, increase the number of lawsuits against lenders, and make it harder for
borrowers with subprime credit scores to get loans. The U.S. Chamber of Commerce has
warned the results will be “business closures, fewer startups, and slower growth. Overall,
this would cost a significant number of jobs…”

5. What impact will the CFPA have on states?

The legislation establishes a new set of minimum financial standards that states will have
to enact. Many financial sectors that are currently regulated by the states will now be
subject to federal regulations. While the legislation establishes a regulatory floor, states
are free to increase regulations as much as they want. States would now be empowered to
regulate federally charted institutions like banks. This creates a problem as it will
establish a patchwork of regulations for national banks.

1
    http://www.opencongress.org
2
    Rep. Jeb Hensarling R-TX, Washington Times, July 22, 2009