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FACTBOX-Obama plan for Consumer Financial Protection Agency
June 16 |
June 16 (Reuters) - The following are details about the Obama administration's proposal for a Consumer Financial Protection Agency as outlined in a document obtained by Reuters and confirmed by an administration official.
The agency would:
* be accountable as primary federal financial consumer protection supervisor.
* have broad authority to protect consumers of credit, savings, payment, and other financial services and regulate such products and services.
* have "full authority" to enforce protections through orders, fines and penalties.
* define standards for plain products and subject alternative products to greater scrutiny.
* ban unfair terms and practices or restrict terms and practices for products that may have benefits.
* help ensure executive pay does not create conflicts of interest between consumers and financial firms.
* enforce fair lending laws and the Community Reinvestment Act, which requires financial institutions to serve sparsely populated or low-income areas.
* overhaul mortgage laws to make them clearer and fairer to consumers.
* require firms to offer a simple mortgage with straightforward terms and uniform disclosure. Consumers could opt for alternative loans but these would be subject to restrictions.
* ban unfair practices such as "yield spread premiums," which entitle mortgage brokers to higher fees if they steer consumers to mortgages with higher costs.
* require mortgage brokers to be paid over time based on loan performance rather than in a lump sum at closing.
* restrict or ban prepayment penalties.
* require loan originators or loan bundlers to retain 5 percent of credit risk. (Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)
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