A strong and effective consumer financial protection agency must be independent in its leadership, funding, and decision-making; have authority over all financial institutions so it can protector consumers no matter where they choose to get their financial services; have primary examination, enforcement, and rulemaking authority; and the standards it sets should be a floor, not a ceiling, so that states can respond to their own consumer protection needs. Sen. Shelby’s Consumer Financial Protection Division (CFPD) meets almost none of these standards.

The proposed CFPD would be housed within the Federal Deposit Insurance Corporation (FDIC) and could not even pass any rules or regulations without approval of the FDIC board. The CFPD would have very limited authority for oversight and enforcement, with no jurisdiction over any banks or depository institutions. It would only be able to supervise and enforce its rules for the one type of financial institution it has jurisdiction over—non-bank mortgage companies—if they have a pattern or practice of breaking the law within the past three years. The CFPD’s rules and regulations would preempt state laws and weaken the ability of states to take action when needed.

This amendment was fortunately stopped before it had the chance to gut the Consumer Financial Protection Bureau. Woodstock Institute will continue to oppose any attempts to weaken the strong consumer protections contained in S. 3217 or attempts to introduce carve-outs for any portion of the financial sector.