A proposed Congressional amendment to the Consumer Financial Protection Agency (CFPA) Act would alter the regulation of credit, mortgage and title insurers.
The bipartisan amendment, sponsored by Rep. Gwen Moore (D-Milwaukee) and Rep. Erik Paulsen (R-Minn.), would keep the CFPA from gaining new authority to regulate the credit, mortgage and title insurers.
“The changes in the Moore-Paulsen amendment bring the underlying bill back into compliance with its original mission: credit and lending product regulation,” Moore said. “The proposed Consumer Financial Protection Agency was not designed to become involved in the ongoing regulation of the insurance industry. Insurers already fall primarily under the regulatory authority of state insurance commissioners.”
The CFPA Act was established to regulate credit and lending products and to protect consumers from predatory practices of lenders. Prior to the Moore-Paulsen amendment, the bill also gave the proposed Consumer Financial Protection Agency new authority to regulate credit, mortgage and title insurers, leaving all other lines of insurance unregulated.
Credit, mortgage and title insurance is primarily sold by insurers to lenders who then sell it to consumers.
“Under the amendment, the CFPA, which is meant to regulate lenders, would still have the authority to stop any unsavory product, including an insurance product, at the point that is sold by lenders to consumers,” Moore said. “(The amendment) simply prevents the CFPA from gaining new authority to regulate insurers.”
Allowing additional federal authority to regulate insurers would lead to two layers of competing regulations, Moore said. “We simply do not need to institute duplicative policies. Furthermore, this bill is not intended to regulate insurers- it is meant to protect consumers in their relationships with lenders and credit providers.”
The amendment does nothing to interfere with the ability of the CFPA to regulate the relationship between lenders and consumers, including insurance products that lenders offer to them, Moore said.
“I was happy to work with my Republican colleague, Congressman Erik Paulsen, on (this amendment),” Moore said. “Not everything we do in Congress is tinged with partisanship – sometimes Republicans and Democrats see eye-to-eye on smart policy.”
The bill has been passed by the House Financial Service committee with the amendment added. It still needs to be considered by the full House of Representatives. If the U.S. Senate passes a version of the CFPA bill, the two versions would go to conference in an attempt to work out the differences. The Moore-Paulsen amendment is not guaranteed to be retained in conference.