To Protect Consumers, Who Will Be Regulated?

By EDWARD WYATT and SEWELL CHAN
NYT

WASHINGTON — An unlikely new tenant in the halls of the Federal Reserve would set out sweeping rules on a wide swath of consumer transactions, possibly making it one of the most powerful new federal agencies in a generation.

The proposed agency is causing concern and confusion, however, among owners of small businesses — drug stores, jewelers, pawnbrokers and car dealers — who fear that by allowing any customers to buy on credit, their businesses could be subject to significant new regulations.

While most of the headlines about the Senate’s consideration of a financial regulation bill have concerned financial giants like Goldman Sachs and complex investments like synthetic collateralized debt obligations, the proposed Bureau of Consumer Financial Protection, which is a major part of the legislation, is likely to be an intense battleground in coming weeks.

Much of the bewilderment — and therefore the argument — stems from the imprecise nature of some of the proposed rules. The new agency would regulate financing provided by most car dealers, for example, but not by rent-to-own furniture vendors, according to the bill’s advocates. Department stores with private-label credit cards would be covered; stores that let their customers pay in installments, without interest, would not, they say.

(More here.)