The new consumer protection agency won't extend its jurisdiction to areas involving investment advisers or insurance agents, according to a Treasury Department official involved with setting it up.
Michael Barr, assistant secretary for financial institutions, said in a speech in Washington last Thursday that the Consumer Financial Protection Bureau will have its hands full with its mandate from the Dodd-Frank financial reform law to monitor consumer financial markets, without adding insurance and securities. The agency will concentrate on products such as mortgages, credit cards and student loans.
“We are determining how to consolidate core authorities that are currently spread across several agencies,” Mr. Barr said.
While boundaries are being worked out, Mr. Barr said he doesn't foresee the bureau stepping onto the turf of the Securities and Exchange Commission — which oversees investment advisers — or state insurance commissioners.
“The bureau has quite a decent-size mission,” Mr. Barr told attendees at a gathering of The Financial Literacy Research Consortium. “I'm pretty sure that will give everybody enough to do for quite a good bit of time.”
The establishment of the agency won't be derailed by shifting political power in Congress, Mr. Barr said. Republicans will take over the House in January and have significantly increased their numbers in the Senate. The party has vowed to revisit the Dodd-Frank law and take an especially hard look at the consumer bureau.
“The critical challenge is not this or that Congress,” Mr. Barr said. “It is, can [the bureau] build itself into a strong, respected institution with research-based, well-founded work? Can it do supervising and rulemaking in a way that balances access and affordability, and consumer protection? Can it be thoughtful and establish a track record?”
The creation of the agency has already sparked controversy. President Barack Obama appointed Harvard University professor Elizabeth Warren as a White House aide to help create the bureau. While fundamentally shaping the bureau as a special adviser to the president, because of fears that she would fail to gain Senate confirmation, Ms. Warren was not tapped to be its director, according to her critics.
Republicans who opposed the bureau said that it represents governmental overreach. Mr. Barr argued that it would promote fairer, more transparent and more efficient markets.
“The CFPB will provide, for the first time, a consumer agency with necessary mission focus, marketwide coverage and consolidated authority,” he said. “It will be an agency that focuses not simply on more regulation but smarter, more coherent and more effective regulation.”
One of its priorities will be to promote financial literacy. The Financial Literacy Research Consortium consists of research centers at the Rand Corp. think tank, Boston College and the University of Wisconsin at Madison. It was established by the Social Security Administration in September 2009 to develop materials and programs to help Americans plan for retirement.
E-mail Mark Schoeff Jr. at [email protected].
