Rep. Frank introduces U.S. consumer agency bill

By Karey Wutkowski

WASHINGTON (Reuters) - The powerful chairman of the U.S. House of Representatives Financial Services Committee on Wednesday introduced legislation to create a new consumer financial protection agency that would strip some powers away from current regulators.

Representative Barney Frank's legislation, which was introduced with 12 Democratic co-sponsors but no Republicans, is largely similar to the Obama administration's proposal, with a few small changes.

"Recent reports about the lack of mortgage modifications and increases in various fees only reinforce the need for this bill, which is already very clear," Frank, a Democrat, said in a statement.

The administration has proposed an independent agency that would have broad power to write and enforce rules on financial products such as credit cards and mortgages.

The proposed new consumer agency has drawn sharp criticism from the financial services industry and concern from current bank regulators, but is a top priority for Democratic lawmakers and the Obama administration.

"This is the right thing to do for all the consumers who lost their homes and who were subject to abusive mortgage lending and credit card practices," House Speaker Nancy Pelosi said in a statement endorsing Frank's legislation.

Despite a lack of Republican co-sponsors, Pelosi vowed that Congress would work in a bipartisan manner and with the Obama administration to move forward on the legislation.

Frank's legislation makes a few tweaks to the administration's plan. The administration's proposal almost fully strips the current bank regulators' consumer protection roles, but Frank's bill would preserve their ability to enforce the Community Reinvestment Act. That act encourages banks to make loans in disadvantaged communities.