Tuesday, June 16, 2009

White House Details Consumer Protection Plan

Another brilliant plan from the best and the brightest.

(Or another prime candidate of "unintended consequence".)

White House Details Consumer Protection Plan
(6/16/09 Washington Post) [emphasis is mine]

"The Obama administration released today details of its plan for a new agency to protect consumers of financial products such as mortgages and credit cards, one of the boldest and most controversial pieces of its blueprint for financial reform.

"The proposed Consumer Financial Protection Agency would have broad powers to regulate the relationship between financial companies and consumers, including writing rules, policing compliance and penalizing delinquent firms. Some of those powers would be taken from other agencies, particularly the Federal Reserve.

"One notable aspect of the proposal would allow the new agency to define a "plain vanilla" product -- such as a 30-year, fixed rate mortgage loan -- and then require firms to offer this basic product."

"The administration has been dribbling out pieces of its financial reform blueprint, with a formal announcement of the entire plan scheduled for tomorrow. The plan would give the Federal Reserve new powers to regulate the largest financial firms, and create a new authority to dismantle firms that fall into trouble. It also would impose new oversight on financial markets for the sale of derivatives and asset-backed securities -- investments made from pieces of loans such as mortgages."

I thought we were going to have a quiet week because we don't have the massive Treasury auctions this week. Wrong. When there's little for Treasury Department to sell, the White House has plenty to sell.

The credit card bill passed by Congress and signed into law the other day is already yielding some great improvement for the consumers - having their card limit lowered so that they don't overspend, having their card cancelled outright so that they don't spend at all, having their APR raised and new "convenience" fees put in place so that they don't need to shell out more money for these banks.

I can't wait to find out what this new agency will do for us.


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