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Cox Testifies Before U.S. House On Obama’s Proposed Agency

JULY 6, 2009—Law School Clinical Professor Prentiss Cox will testify before the U.S. House Committee on Energy and Commerce’s Subcommittee on Commerce, Trade, and Consumer Protection in Washington, D.C., on July 8, 2009.

The Subcommittee, chaired by U.S. Rep. Bobby L. Rush (D-Ill.), is hearing testimony on President Barack Obama’s proposed Consumer Financial Protection Agency (CFPA) and implications for consumers and the Federal Trade Commission (FTC). The hearing is part of Congressional scrutiny of Obama’s June proposal for nationwide financial regulatory reform.

At the heart of the proposal is creation of the CFPA, an independent agency, separate from bank regulators, charged with safeguarding consumers. The CFPA would have authority to regulate mortgages, credit cards, payday lending, overdraft fees, and other consumer financial products and those who provide the products and services. States would retain power to enact stricter laws.

The CFPA would assume much of the current authority of the FTC, Federal Reserve Board, and federal banking regulators. It would affect several other federal agencies as well, by consolidating the oversight now provided.

Professor Cox was an assistant attorney general and manager of the Consumer Enforcement Division in the Minnesota Attorney General’s Office before joining the Law School faculty. He has prosecuted numerous nationally recognized cases involving predatory lending and subprime mortgage lending, foreclosure, credit card practices, and telemarketing fraud.

Professor Cox has testified for and drafted numerous consumer protection laws, including 2007 legislation designed to regulate foreclosure rescue scams that was subsequently enacted by the Minnesota legislature. In February 2009, he testified before the U.S. Senate Committee on Commerce, Science and Transportation at a hearing on consumer protection and the credit crisis.

The Obama administration says the CFPA will centralize responsibility, fill current regulatory gaps, and eliminate abuses that led to the recent financial crisis, and consumer advocacy groups are coming out in support of the proposal. Ed Mierzwinski, director of the Washington, D.C., consumer watchdog organization U.S. Public Interest Research Group, recently testified before the House Financial Services Committee in favor of the new agency. A June Wall Street Journal article quotes him as saying, "This is, to me, as big as creating deposit insurance in the 1930s."

Opponents say the CFPA is a threat to economic freedom and will interfere in day-to-day business, create another cumbersome layer of bureaucracy, and stifle “innovation” in consumer financial products.

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