On June 30, 2009, the Obama Administration sent legislation to Congress that would create a new Consumer Financial Protection Agency ("CFPA"). Working with state regulators, the new agency would assume authority for the privacy provisions of the Gramm-Leach-Bliley Act, and would have the power to write rules and impose penalties pursuant to a variety of existing statutes, including the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act. To date, these powers have been shared among all financial services regulators, including the Federal Trade Commission ("FTC"). Under the proposal, the FTC would retain primary responsibility for preventing fraud and encouraging security in the financial markets.
While some regulatory authority for financial products and services protections would flow from the FTC to the CFPA, the FTC would have increased powers to issue rules related to unfair and deceptive practices, and an enhanced ability to issue civil monetary penalties. The proposal also includes expanded FTC authority over the banking sector with respect to data security. While the legislation proposes transferring staff from certain financial services regulators, there would be no transfer of staff from the FTC. Accordingly, the FTC may have more resources to pursue other consumer protection issues, including privacy in non-financial markets.
The Administration’s full report on its financial reform plan can be viewed here.