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AFSA Opposes Obama's Proposal for New Federal Agency

President Barack Obama addressed Wall Street’s financial firms Monday to promote his agenda for financial regulatory reform, which includes expanding the authority of the Federal Reserve and creating the Consumer Financial Protection Agency (CFPA). But at least one association representing the financial services industry is balking at his proposals.

by Staff
September 17, 2009
2 min to read


President Barack Obama addressed Wall Street’s financial firms Monday to promote his agenda for financial regulatory reform, which includes expanding the authority of the Federal Reserve and creating the Consumer Financial Protection Agency (CFPA). But at least one association representing the financial services industry is balking at his proposals.

Obama’s speech was given a year after investment firm Lehman Brothers collapsed, triggering a worldwide financial crisis. The president said that despite signs of improvement in the economy, financial reform is still needed to prevent another economic collapse.

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“Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them,” Obama said.

One part of the president’s reform plan calls for the creation of the CFPA, which would enforce new financial regulations and provide consumer protection. "This crisis was not just the result of decisions made by the mightiest of financial firms. It was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages," he said.

"This is in part because there is no single agency charged with making sure that doesn't happen. That's what we intend to change," he added.

Despite the president’s promotion of the CFPA, the American Financial Services Association (AFSA) said the proposed federal agency would hinder consumers’ borrowing options.

“While AFSA supports the administration’s goals of improved consumer protection for borrowers and strong regulation for the financial services sector, the creation of a Consumer Financial Protection Agency is not the way to go,” AFSA’s President and CEO Chris Stinebert said in statement.

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“Under the proposed CFPA, the government essentially would have the role of deciding what type of mortgage, auto loan and small business loan is right for one consumer or another. The result will be fewer, less flexible borrowing options and higher prices for financial products and services at a time when Americans can least afford it,” Stinebert added.

AFSA suggested that instead of creating the new federal agency, the Obama administration provide more transparent disclosures, improve financial education, allocate more resources to the current regulatory structure and make better use of existing government agencies.

“This approach is likely to be far more effective, while leaving choice with consumers,” the AFSA said.

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