Consumer Law

The proposal also calls for giving the agency the power to impose  "heightened duties of care on financial intermediaries that reflect reasonable consumer expectations."  I wonder if that means a fiduciary duty or suitability standard, as some have urged.  The proposal gives mortgage lending as an example, and states the agency would have authority to "[r]equire mortgage brokers to owe a duty of best execution among available mortgage loans to avoid conflicts of interest between themselves and the homeowners, as well as a duty to determine the mortgages they sell are affordable to borrowers."

What I like best about this proposal is that unlike many of the agencies that already have some role to play in consumer lending, this agency's mandate would be to focus on consumer protection.  Its primary role would not be to insure the safety and soundness of financial institutions or to keep the economy running.  I wrote an op-ed in the Pittsburgh Post- Gazette in March of last year calling for an agency to oversee consumer credit transactions that would not be tasked with other asignments as well.  I elaborated on this in a blog post on March 19, 2008 about Alan Greenspan's memoir, The Age of Turbulence, after noting that the book largely ignored the many consumer credit regulations the Fed oversees:

[I]sn't something wrong when the memoir of the person at the head of what is probably the agency with the greatest power over the rules governing consumer credit transactions gives those rules such short shrift?  Not that I blame Greenspan.  He was appointed to the job because of his mastery of macroeconomics.  But again, shouldn't someone who has mastered the law of consumer credit run the principal agency devoted to that subject?  In other words, at the risk of beating a dead horse, is the Fed the best agency to administer consumer credit laws?