WASHINGTON (CNN) – The Obama administration's plan to overhaul lending regulations - stemming from the housing and credit meltdowns, as well as the current recession - moves to Capitol Hill Wednesday with the start of three straight days of hearings. The House Financial Services Committee will get the banking community's input first.
Steve Bartlett, president and CEO of the Financial Services Roundtable, an industry lobbying group, told CNN Radio that larger lending institutions "favor major regulatory reform. We think the time is overdue." But the administration's plan is a mixed bag, even if "generally in the right direction," according to Bartlett, who is scheduled to be one of the lead-off witnesses.
Bankers approve of some of the administration's plans to consolidate the myriad of agencies that regulate financial products. "We would like to see more consolidation. We think what America needs now is fewer regulators, but stronger regulators. Fewer agencies, but agencies that have more stick."
Where bankers split strongly with the White House is over the idea of creating a new Consumer Financial Protection Agency. "We think consumer protection should be beefed up. What we don't like is ... putting it into a separate, free-standing agency that will have less power to protect consumers," Bartlett said.
Current regulators, according to Bartlett, "have the full power of cease-and-desist orders, or life and death, over the financial institutions."
The proposed Consumer Financial Protection Agency would have sweeping powers as envisioned by the White House to fine lenders for bad practices. Such issues as deceptive ads and unclear loan applications might also bring federal regulatory wrath.
Bankers fear a super agency would meddle too much in day-to-day operations of lending institutions, while still relying on the heavy hand of other agencies for regulating non-consumer-oriented practices.