Obama's New Agency

Obama Said to Create Consumer Finance Agency With Broad Powers (Allison Vekshin)

June 16 (Bloomberg) -- President Barack Obama will propose creating an agency to protect consumers of financial products with the authority to punish offending firms with fines and penalties, according to a Treasury document.

The Consumer Financial Protection Agency, to be proposed tomorrow in the overhaul of financial regulations, will have the authority to write rules for banks and non-bank companies, and supervise and examine institutions for compliance, according to the document obtained by Bloomberg News.

“Lax consumer protections contributed significantly to the current financial crisis,” the document said. “The financial crisis, in turn, revealed inadequacies in consumer and investor protection.”

Obama’s plan is similar to a proposal introduced last week by Senate Banking Committee Chairman Christopher Dodd, who will lead efforts in the Senate to enact Obama’s proposals.

Dodd said the agency should have enforcement authority over credit and bank products and shield consumers from predatory practices of mortgage brokers and banks.