Boston Globe: Consumer advocates may join overseers
WASHINGTON - House Financial Services chairman Barney Frank, assembling a bill to overhaul financial regulations in hopes of preventing another economic meltdown, agreed yesterday to add consumer and community advocates to an oversight board that would monitor the credit industry.
Representative Maxine Waters proposed adding five more members to an eight-member board that would oversee the proposed Consumer Financial Protection Agency, which would monitor mortgage lenders as well as banks and other financial institutions. Waters, a California Democrat, wants the board to include a consumer protection advocate, a civil rights activist, and fair-lending practices expert, as well as a community representative and an official from a bank in an underserved community.
The goal, according to Waters's amendment: ensure that minorities and low-income communities hit hardest by the mortgage crisis and predatory lending practices have advocates on their side. Under the current bill, the oversight board consists of the chairmen of eight federal agencies, including the Federal Reserve, the Federal Deposit Insurance Corporation, the Federal Trade Commission, and the Department of Housing and Urban Development.
Waters and other liberal Democrats argue that the current proposed board is weighted toward federal regulators who allowed last year's Wall Street collapse in the first place.
"I am concerned about the lack of a consumer voice on this board,'' Waters said in a statement yesterday. "Given the important responsibilities of the board, I believe that it should be expanded.''
Frank, a Newton Democrat, said Waters's proposal is "perfectly reasonable'' and he supports it. But he added that his committee has effectively defeated a Republican move to give federal regulators the power to supersede the recommendations of a separate consumer advisory board the bill would create.
Jerry Konohia, the president of OpenDoor Housing Fund, a Washington-area community lending agency, said he was excited that Frank supports the amendment.
"I think that the [consumer protection] act itself was on point and necessary, but the expansion of the governing board to include consumer advocates is critical,'' Konohia said.
The committee is expected to vote today on whether to create the consumer agency, which is opposed by Republicans and the financial industry.
Last week, the committee bucked the White House and voted to spare the majority of banks and credit unions from additional examination from the proposed new agency. These banks would still have to follow the agency's rules and open their books to other federal regulators monitoring their overall stability.