U.S. lawmaker Barney Frank is making key changes to the White House plan for an agency to protect consumers from risky financial products, according to a congressional document obtained by Reuters on Tuesday.
Financial firms will not be required to offer plain vanilla products and services, such as mortgages with simple terms and contracts, the document said.
Representative Frank, who chairs the House Financial Services Committee, is expected to soon release a revised discussion draft about the proposed consumer agency, which has drawn criticism from businesses and banking regulators.
Businesses fear the Consumer Financial Protection Agency (CFPA) will stifle innovation and erode profits as consumers seek out government-approved products. Regulators fear the consumer agency will take away some of their authority.
According to the document, the consumer agency will not have the authority to approve or change business plans. Banking regulators will coordinate and consult with the consumer agency on timing, scope and results of the exams to ensure minimum regulatory burden.
Depository institutions will have simultaneous federal safety and soundness and consumer compliance exams unless they want separate exams, the document said.
Other service providers, such as accountants, lawyers, telecom, and cable companies, will not be required to comply with the consumer agency rules if they are acting in their traditional capacities, said the document.
The Federal Reserve will partially fund the agency so that financial institutions are not unduly burdened with more fees.
All non-bank financial institutions that provide financial products and services for consumers will be required to register with the CFPA.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)