The Washington Post reports that Democrats are considering a bill “to shield big banks from potentially tougher state regulations of credit cards, mortgages and savings accounts.”
This approach differs from that of President Obama. He wants to give states a considerable role in regulating financial institutions.
Consumers advocates are not happy with the proposal. Big banks are happy with it.
Currently banks have the option of following either federal or state rules. Local banks tend to follow state rules and big banks follow federal rules.
The Post says: Under a plan by Obama and Massachusetts Democratic Rep. Barney Frank, lenders would have to answer to both state and federal regulators. A new Consumer Financial Protection Agency, or CFPA, would set the federal standard but states would be free to impose tougher rules.
The House Financial Services Committee, chaired by Frank, planned to take up legislation creating a CFPA the week of Oct. 12.
While the financial industry is lobbying against a new regulator, Frank said the agency is needed because the Federal Reserve and other regulators dropped the ball when it came to protecting the average American using credit cards and buying homes.