The Obama administration's consumer financial protection plan meets Congress

Watching Congressional hearings on important topics always seems beforehand like it's going to be a good idea. You know: Our elected representatives, asking the experts (or the culprits) the questions that need to be asked. Every once in a while it does work out this way: I thought the Senate Banking Committee's hearings on the banking and auto bailouts last year were riveting.

But then there's this morning's hearing by the House Energy and Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection on the administration's proposal for a new Consumer Financial Protection Agency. We were 75 minutes into it before the first witness got to speak. And I'm quickly realizing from the opening statements that this subcommittee's main concern is going to be how the legislation would affect the Federal Trade Commission. Why's that? It's because this subcommittee is responsible for overseeing the FTC. And subcommittees and committees that oversee agencies tend to be very protective of them.

Also, most of the Republicans on the committee feel compelled to work Fannie Mae and Freddie Mac into their opening statements at some point. Because, you know, this whole thing is really their fault. (It's not, but I guess that once you've picked a talking point, it is important to stick to it.)

I've read the CPFA bill, and I generally agree with the logic behind it. It takes consumer-protection responsibilities (and personnel) from the various banking regulators and consolidates them into one agency that would presumably be far more focused on and diligent about protecting consumers than the banking agencies have been. At the same time, the new CFPA would—in theory, at least—create a more level playing field for banks vs. non-bank competitors such as mortgage brokers.

This last is complicated by the fact that primary regulatory responsibility for the non-banks rests with the states, and the Administration isn't willing to try to change that just now. So the CFPA would set minimum national standards for the non-banks, and help the states keep an eye on that. Whether this is practical, I don't know. I got an earful yesterday from the American Bankers Association's Ed Yingling about why it won't be (mainly that it would cost too much for the CFPA to play the role of reliable backstop for overburdened state regulators). But the idea makes some sense, right? I kind of doubt that any of the members of the Subcommittee on Commerce, Trade and Consumer Protection are going to be interested in discussing that, though. So I think it's about time for me to tune out.