Consumer Financial Protection Agency
On September 25, 2009, Rep. Barney Frank (D-Mass.) circulated a discussion draft of legislation to create the CFPA. In addition, a hearing of the full House Financial Services Committee was held on September 30, 2009 for the purpose of discussion of the proposed legislation.
The Brookings Institution released the transcript of Martin Neil Baily’s testimony before the Senate Committee on Banking, Housing and Urban Affairs on September 29, 2009. Mr. Baily was the chairman of the Council of Economic Advisers during the Clinton administration during the 1999 to 2001 term. In addition, he was one of three members of the council from 1994 to 1996. You can view his testimony here.
Mr. Baily’s testimony can be summarized as follows: (1) The best framework to guide current reform efforts is an objectivist approach that divides regulation up into micro-prudential, macro-prudential and conduct of business regulation; (2) the quality of regulation must be improved regardless of where it is done; (3) a single federal micro-prudential regulator should be created combining the regulatory and supervisory functions currently carried out at the Federal Reserve, the OCC, the OTS, the SEC and the FDIC; (4) the United States needs effective conduct of business regulation; and (5) the Federal Reserve should be the systemic risk monitor with some additional regulatory power to adjust lending standards.
