Proposed agency aims to help with debt management issues

10.10.09
By Timothy Jones

Consumers who are struggling with debt management problems could potentially get relief under a proposed new federal agency being backed by the Obama Administration and some members of Congress.

On Friday, President Obama renewed his push for a Consumer Financial Protection Agency that would aim to crack down on a number of objectionable practices that have made it tougher for people to put their debt problems behind them.

A previous report in the Los Angeles Times notes that the proposed agency would have oversight over financial products ranging from payday loans to credit cards to mortgages, and that it would have the power to impose large fines and bring charges against those who violate guidelines for such products.

The proposal has run into opposition from groups like the U.S. Chamber of Commerce, which says it agrees with the White House on the need for greater consumer protections while arguing that the current proposal would harm small businesses. The group's website notes that there are already six federal agencies responsible for protecting consumers from predatory lending and other abuses, and questions whether a "massive new federal agency" would do the job any better.

Meanwhile, the president introduced five people from around the country on Friday who had been damaged by predatory lending practices as he strengthened his efforts to create the new agency.

Among these people were a woman who fell behind on a $550 payday loan because of health problems and ended up paying more than $2,700 in interest before a so-called "good Samaritan" paid off the balance for her. Others at the event had been stung by practices involving questionable overdraft fees and unscrupulous loan practices.

Such efforts have continued to gain momentum as more and more people have trouble with debt management in the current economy.

More Credit & Debt Articles | News Home | Discuss in our Forum

A proposed new agency would try to protect consumers from various financial abuses.