Jan 15, 2010
Update - Consumer Financial Protection hits speed bump
New regulations may still affect non-profit ogranizations
In an article today, the Wall Street Journal reported (click here for article link) that Senate Banking Committee Chairman Dodd (D-CT) may be willing to drop the Consumer Financial Protection Agency (CFPA) from the broader financial regulatory reform legislation, in order to ensure the passage of the broader bill with bipartisan support.
Aides close to the negotiations have said that in return, Republicans must agree to create a strong consumer-protection division within another federal agency. According to the article, “Alternatives to the agency include a new division within the Treasury that would draft consumer rules, and a consumer-protection division run by a new federal bank regulator. The head of this division could be appointed by the White House, giving it more autonomy…”
However, this all depends on the negotiations between Chairman Dodd and Ranking Member Shelby (R-AL) continuing to progress. Negotiations between the two Senators on this legislation have broken down before, so there is a possibility that Chairman Dodd may continue to push for the CFPA if the negotiations break down again. Given Chairman Dodd’s impending retirement, he is eager to ensure that some version of financial regulatory reform is passed.
What this means for the nonprofit world is unclear. We will have to pay close attention to the directive and authority given to any new consumer division within the Treasury. As you may recall, we have been concerned about the current legislation’s expansive definition of “financial activity” (which would be regulated by the proposed CFPA). This definition could draw in nonprofits because of organization’s fundraising efforts (charitable giving advice/planning/donor instruction) or if the nonprofits include any financial education (no matter how basic), credit counseling, debt management, or tax planning (other than return prep) as part of their programming.
Additionally, the White House and Treasury Department are still signaling that they support the creation of a CFPA and the House passed its version of the legislation late last year which included the establishment of the CFPA. Therefore, regardless of what happens in the Senate, we expect this issue to continue to be in play during the House and Senate conference negotiations later in the process. You will recall that ACR, together with the help of the nonprofit CFPA coalition, comprised of organizations from the charitable community including Independent Sector, DMA Nonprofit Federation, United Way, and others, was able to secure language in the House-passed bill to ensure that charitable giving activity would not trigger CFPA authority for nonprofits.
ACR will continue to monitor developments on this legislation and will keep you posted on the latest. It’s not to late share your (or your grantees’) story on how CFPA may affect your work with Congressional offices. Contact us today (.(JavaScript must be enabled to view this email address)).