1.Short
title; table of contents
(a)This Act may be cited
as the Financial Product Safety
Commission Act of 2009
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title; table of
contents.
Sec. 2. Findings.
Sec. 3. Definitions.
Sec. 4. Establishment of Commission.
Sec. 5. Objectives and responsibilities.
Sec. 6. Coordination of enforcement.
Sec. 7. Authorities.
Sec. 8. Collaboration with Federal and State
entities.
Sec. 9. Prohibited acts.
Sec. 10. Enforcement.
Sec. 11. Reports.
Sec. 12. Authorization of appropriations.
2.Congress finds that—
(1)the Nation’s
multiagency financial services regulatory structure has created a dispersion of
regulatory responsibility, which in turn has led to an inadequate focus on
protecting consumers from inappropriate consumer financial products and
practices;
(2)the absence of
appropriate oversight has allowed excessively costly or predatory consumer
financial products and practices to flourish; and
(3)the creation of a
regulator whose sole focus is the safety of consumer financial products would
help address this lack of consumer protection.
3.For purposes of this Act—
(1)the terms
Commission, Chairperson, and
Commissioner mean the Financial Product Safety Commission
established under this Act and the Chairperson and any Commissioner thereof,
respectively;
(2)the term
consumer financial product includes—
(A)any extension of
credit, deposit account, payment mechanism, or other product or service within
the scope of—
(i)the
Truth in Savings Act (12 U.S.C. 4301 et seq.);
(ii)the Consumer
Credit Protection Act (15 U.S.C. 1601 et seq.); or
(iii)article 3
(relating to negotiable instruments) or article 4 (relating to bank deposits)
of the Uniform Commercial Code, as in effect in any State;
(B)any other
extension of credit, deposit account, or payment mechanism; and
(C)any ancillary
product, practice, or transaction;
(3)the term
appropriate committees of Congress
means the Committee on
Banking, Housing, and Urban Affairs and the Subcommittee on Financial Services
and General Government of the Committee on Appropriations of the Senate, and
the Committee on Financial Services and the Subcommittee on Financial Services
and General Government of the Committee on Appropriations of the House of
Representatives, and any successor committees, as may be constituted;
(4)the term
consumer means any natural person and any small business concern,
as defined in section 3 of the Small Business Act (15 U.S.C. 632); and
(5)the term
credit
has the same meaning as in section 103 of the Truth in
Lending Act (15 U.S.C. 1602).
4.Establishment of
Commission
(a)Establishment;
chairperson
(1)There
is established the Financial Product Safety Commission
which
shall be an independent establishment, as defined in section 104(1) of title 5,
United States Code.
(2)
(A)The Commission shall be comprised of 5 commissioners,
appointed by the President, by and with the advice and consent of the
Senate.
(B)In
making appointments to the Commission, the President shall consider individuals
who, by reason of their background and expertise in areas related to consumer
financial product safety, are qualified to serve as members of the
Commission.
(3)The
Chairperson of the Commission shall be appointed by the President, by and with
the advice and consent of the Senate, from among the members of the
Commission.
(4)Any
Commissioner may be removed by the President for neglect of duty or malfeasance
in office, but for no other cause.
(b)
(1)Except as provided in paragraph (2)—
(A)the Commissioners
first appointed under this section shall be appointed for terms ending 3, 4, 5,
6, and 7 years, respectively, after the date of enactment of this Act, the term
of each to be designated by the President at the time of nomination; and
(B)each of their
successors shall be appointed for a term of 5 years from the date of the
expiration of the term for which the predecessor was appointed.
(2)Any
Commissioner appointed to fill a vacancy occurring prior to the expiration of
the term for which the predecessor thereof was appointed shall be appointed
only for the remainder of such term. A Commissioner may continue to serve after
the expiration of such term until a successor has taken office, except that
such Commissioner may not continue to serve more than 1 year after the date on
which the term of that Commissioner would otherwise expire under this
subsection.
(c)Restrictions on
outside activities
(1)Not more than 3 Commissioners may be affiliated with
the same political party.
(2)No individual may serve as a Commissioner if that
individual—
(A)is in the employ
of, holding any official relation to, or married to any person engaged in
selling or devising consumer financial products;
(B)owns stock or
bonds of substantial value in a person so engaged;
(C)is in any other
manner pecuniarily interested in a person so engaged; or
(D)engages in any
other business, vocation, or employment.
(d)Vacancies;
quorum; seal; Vice Chairperson
(1)No
vacancy on the Commission shall impair the right of the remaining Commissioners
to exercise all the powers of the Commission.
(2)Three
members of the Commission shall constitute a quorum for the transaction of
business, except that—
(A)if there are only
3 members serving on the Commission because of vacancies on the Commission, 2
members of the Commission shall constitute a quorum for the transaction of
business; and
(B)if there are only
2 members serving on the Commission because of vacancies on the Commission, 2
members shall constitute a quorum for the 6-month period (or the 1-year period,
if the 2 members are not affiliated with the same political party) beginning on
the date of the vacancy which caused the number of Commissioners to decline to
2.
(3)The
Commission shall have an official seal, of which judicial notice shall be
taken.
(4)The Commission shall annually elect a Vice
Chairperson to act in the absence or disability of the Chairperson or in case
of a vacancy in the office of the Chairperson.
(e)The
Commission shall maintain a principal office and such field offices as it
determines necessary, and may meet and exercise any of its powers at any other
place.
(f)Functions of
chairperson; request for appropriations
(1)The
Chairperson shall be the principal executive officer of the Commission, and
shall exercise all of the executive and administrative functions of the
Commission, including functions of the Commission with respect to—
(A)the appointment
and supervision of personnel employed by the Commission (and the Commission
shall fix their compensation at a level comparable to that for employees of the
Securities and Exchange Commission);
(B)the distribution
of business among personnel appointed and supervised by the Chairperson and
among administrative units of the Commission; and
(C)the use and
expenditure of funds.
(2)In
carrying out any of the functions of the Chairperson under this subsection, the
Chairperson shall be governed by general policies of the Commission and by such
regulatory decisions, findings, and determinations as the Commission may, by
law, be authorized to make.
(3)Requests for
appropriationsRequests or estimates for regular, supplemental,
or deficiency appropriations on behalf of the Commission may not be submitted
by the Chairperson without the prior approval of a majority vote of the
Commission.
(g)Agenda and
priorities; establishment and commentsNot later than 30 days
before the beginning of each fiscal year, the Commission shall establish an
agenda for Commission action under its jurisdiction and, to the extent
feasible, shall establish priorities for such actions. Before establishing such
agenda and priorities, the Commission shall conduct a public hearing on the
agenda and priorities, and shall provide reasonable opportunity for the
submission of comments.
5.Objectives and
responsibilities
(a)The
objectives of the Commission are—
(1)to minimize
unreasonable consumer risk associated with buying and using consumer financial
products;
(2)to prevent and
eliminate practices that lead consumers to incur unreasonable, inappropriate,
or excessive debt, or make it difficult for consumers to repay existing debt,
including practices or product features that are abusive, fraudulent, unfair,
deceptive, predatory, anticompetitive, or otherwise inconsistent with consumer
protection;
(3)to promote
practices that assist and encourage consumers to use credit and consumer
financial products responsibly, avoid excessive debt, and avoid unnecessary or
excessive charges derived from or associated with consumer financial
products;
(4)to ensure that
providers of consumer financial products provide credit based on the ability of
the consumer to repay the debt incurred;
(5)to ensure that
consumer credit history is maintained, reported, and used fairly and
accurately;
(6)to maintain
strong privacy protections for consumer transactions, credit history, and other
personal information associated with the use of consumer financial
products;
(7)to collect,
investigate, resolve, and inform the public about consumer complaints regarding
consumer financial products;
(8)to ensure a fair
resolution of consumer disputes regarding consumer financial products;
and
(9)to take such
other steps as are reasonable to protect users of consumer financial
products.
(b)The
Commission shall—
(1)promulgate
consumer financial product safety rules that—
(A)ban abusive,
fraudulent, unfair, deceptive, predatory, anticompetitive, or otherwise
anticonsumer practices, products, or product features;
(B)place reasonable
restrictions on consumer financial products, practices, or product features to
reduce the likelihood that they may be provided in a manner that is
inconsistent with the objectives specified in subsection (a); and
(C)establish
requirements for such clear and adequate warnings or other information, and the
form and manner of delivery of such warnings or other information, as may be
appropriate to advance the objectives specified in subsection (a);
(2)establish and
maintain a best practices guide for all providers of consumer financial
products;
(3)conduct such
continuing studies and investigations of consumer financial products industry
practices as it determines necessary;
(4)award grants or
enter into contracts for the conduct of such studies and investigations with
any person (including a governmental entity), as necessary to advance the
objectives specified in subsection (a);
(5)following
publication of a rule, assist public and private organizations or groups of
consumer financial product providers, administratively and technically, in the
development of safety standards or guidelines that would assist such providers
in complying with such rule;
(6)comment on
selected rulemakings of agencies designated in section 6(d) affecting consumer
financial products; and
(7)establish and
operate a consumer financial product customer hotline which consumers can call
to register complaints and receive information on how to combat anticonsumer
products or practices.
6.Coordination of
enforcement
(a)Notwithstanding any concurrent or similar authority of
any other agency, the Commission shall enforce the requirements of this
Act.
(b)The authority granted to the Commission to make and
enforce rules under this Act shall not be construed to impair the authority of
any other Federal department or agency to make and enforce rules under any
other provision of law, provided that any portion of any rule promulgated by
any other such department or agency that conflicts with a rule promulgated by
the Commission and that is less protective of consumers than the rule
promulgated by the Commission shall be superseded by the rule promulgated by
the Commission, to the extent of the conflict. Any portion of any rule
promulgated by any other such department or agency that is not superseded by a
rule promulgated by the Commission shall remain in force without regard to this
Act.
(c)Any department or agency designated in subsection (d)
may exercise, for the purpose of enforcing compliance with any requirement
imposed under this Act, any authority conferred on such department or agency by
any other Act.
(d)Designated
departments and agenciesThe departments and agencies designated
in this subsection are—
(1)the Board of
Governors of the Federal Reserve System;
(2)the Federal
Deposit Insurance Corporation;
(3)the Office of the
Comptroller of the Currency;
(4)the Office of
Thrift Supervision;
(5)the National
Credit Union Administration;
(6)the Federal
Housing Finance Authority;
(7)the Federal
Housing Administration;
(8)the Department of
Housing and Urban Development;
(9)the Federal Home
Loan Bank Board;
(10)the Federal
Trade Commission; and
(11)any successor to
the agencies, referred to in paragraphs (1) through (10), as may be
constituted.
(e)Coordination of
rulemakingAny department or agency designated in subsection (d)
that engages in a rulemaking affecting consumer financial products shall
consult with the Commission in the promulgation of such rules.
7.
(a)Authority To
conduct hearings or other inquiries
(1)The Commission may, by one or more of its members, or by
such agents or agency as it may designate, conduct any hearing or other inquiry
necessary or appropriate to its functions anywhere in the United States.
(2)A Commissioner who participates in a hearing, or
other inquiry described in paragraph (1), shall not be disqualified solely by
reason of such participation from subsequently participating in a decision of
the Commission in the same matter.
(3)The Commission shall publish notice of any proposed
hearing in the Federal Register, and shall afford a reasonable opportunity for
interested persons to present relevant testimony and data.
(b)Commission
powers; ordersThe Commission shall have the power—
(1)to require, by
special or general orders, any person to submit in writing such reports and
answers to questions as the Commission may prescribe to carry out a specific
regulatory or enforcement function of the Commission, and such submission shall
be made within such reasonable period and under oath or otherwise as the
Commission may determine, and such order shall contain a complete statement of
the reasons that the Commission requires the report or answers specified in the
order to carry out a specific regulatory or enforcement function of the
Commission;
(2)to administer
oaths;
(3)to require by
subpoena the attendance and testimony of witnesses and the production of all
documentary evidence relating to the execution of its duties;
(4)in any proceeding
or investigation to order testimony to be taken by deposition before any person
who is designated by the Commission and has the power to administer oaths and,
in such instances, to compel testimony and the production of evidence in the
same manner as authorized under paragraph (3);
(5)to pay witnesses
the same fees and mileage costs as are paid in like circumstances in the courts
of the United States;
(6)to accept
voluntary and uncompensated services relevant to the performance of the duties
of the Commission, notwithstanding the provisions of section 1342 of title 31,
United States Code, and to accept voluntary and uncompensated services (but not
gifts) relevant to the performance of the duties of the Commission provided
that any such services shall not be from parties that have or are likely to
have business before the Commission;
(7)to—
(A)issue an order
requiring compliance with applicable legal requirements;
(B)issue a civil
penalty order in accordance with section 10(b);
(C)initiate,
prosecute, defend, intervene in, or appeal (other than to the Supreme Court of
the United States), through its own legal representative and in the name of the
Commission, any civil action, if the Commission makes a written request to the
Attorney General of the United States for representation in such civil action
and the Attorney General does not, within the 45-day period beginning on the
date on which such request was made, notify the Commission in writing that the
Attorney General will represent the Commission in such civil action; and
(D)whenever the
Commission obtains evidence that any person has engaged in conduct that may
constitute a violation of Federal criminal law, including a violation of
section 9, transmit such evidence to the Attorney General of the United States;
and
(8)to delegate any
of its functions or powers, other than the power to issue subpoenas under
paragraph (3), to any officer or employee of the Commission.
(c)Noncompliance
with subpoena or commission orderIf a person refuses to obey a
subpoena or order of the Commission issued under subsection (b), the Commission
(subject to subsection (b)(7)) or the Attorney General of the United States may
bring an action in the United States district court for the district and
division in which the inquiry is carried out or any other appropriate United
States district court seeking an order requiring compliance with the subpoena
or order.
(d)Disclosure of
informationNo person shall be subject to civil liability to any
person (other than the Commission or the United States) for disclosing
information to the Commission.
(e)Customer and
revenue dataThe Commission may, by rule, require any provider of
consumer financial products to provide to the Commission such customer and
revenue data as may be required to carry out this Act.
(f)Purchase of
consumer financial products by commissionFor purposes of
carrying out this Act, the Commission may purchase any consumer financial
product and it may require any provider of consumer financial products to sell
the product to the Commission at cost.
(g)The Commission is authorized to enter into contracts
with governmental entities, private organizations, or individuals for the
conduct of activities authorized by this Act.
(h)Budget
estimates and requests; legislative recommendations; testimony; comments on
legislation
(1)Budget copies
to CongressWhenever the Commission submits any budget estimate
or request to the President or the Office of Management and Budget, it shall
concurrently transmit a copy of that estimate or request to the appropriate
committees of Congress.
(2)Legislative
recommendationWhenever the Commission submits any legislative
recommendations, testimony, or comments on legislation to the President or the
Office of Management and Budget, it shall concurrently transmit a copy thereof
to the appropriate committees of Congress. No officer or agency of the United
States shall have any authority to require the Commission to submit its
legislative recommendations, testimony, or comments on legislation, to any
officer or agency of the United States for approval, comments, or review, prior
to the submission of such recommendations, testimony, or comments to the
appropriate committees of Congress.
8.Collaboration
with Federal and State entities
(a)Nothing
in this Act or any rule promulgated under this Act may be construed to annul,
alter, affect, or exempt any person from complying with the laws of any State,
except to the extent that those laws are inconsistent with a consumer financial
product safety rule promulgated by the Commission, and then only to the extent
of the inconsistency. For purposes of this section, a State law is not
inconsistent with this Act or a consumer financial product safety rule, or the
purposes of the Act or rule, if the protection afforded by such State law to
any consumer is greater than the protection provided by the consumer financial
product safety rule or this Act. Nothing in this Act or any rule promulgated
under this Act precludes any remedy under State law to or on behalf of a
consumer.
(b)Programs To
promote Federal-State cooperation
(1)The Commission shall establish a program to promote
cooperation between the Federal Government and State governments for purposes
of carrying out this Act.
(2)In
implementing the program under paragraph (1), the Commission may—
(A)accept from any
State or local authority engaged in activities relating to consumer protection
assistance in such functions as data collection, investigation, and educational
programs, as well as other assistance in the administration and enforcement of
this Act which such States or local governments may be able and willing to
provide and, if so agreed, may pay in advance or otherwise for the reasonable
cost of such assistance; and
(B)commission any
qualified officer or employee of any State or local government agency as an
officer of the Commission for the purpose of conducting investigations.
(c)Cooperation of
Federal departments and agenciesThe Commission may obtain from
any Federal department or agency such statistics, data, program reports, and
other materials as it may determine necessary to carry out its functions under
this Act. Each such department or agency shall cooperate with the Commission
and, to the extent permitted by law, furnish such materials to the Commission.
The Commission and the heads of other departments and agencies engaged in
administering programs relating to consumer financial product safety shall, to
the maximum extent practicable, cooperate and consult in order to ensure fully
coordinated efforts.
9.It shall be unlawful for
any person—
(1)to advertise, offer, or attempt to enforce
any agreement, term, change in term, fee, or charge in connection with any
consumer financial product, or engage in any practice, that is not in
conformity with this Act or an applicable consumer financial product safety
rule under this Act; or
(2)to fail or refuse
to permit access to or copying of records, or fail or refuse to establish or
maintain records, or fail or refuse to make reports or provide information to
the Commission, as required under this Act or any rule under this Act.
10.
(a)
(1)Knowing and
willful violationsAny person who knowingly and willfully
violates section 9 shall be fined not more than $500,000, imprisoned not more
than 1 year, or both for each such violation.
(2)Any individual director, officer, or agent of a business
entity who knowingly and willfully authorizes, orders, or performs any of the
acts or practices constituting in whole or in part a violation of section 9
shall be subject to penalties under this section, without regard to any
penalties to which that person may be otherwise subject.
(b)
(1)Any person who violates section 9 shall be subject to a
civil penalty in an amount established under paragraph (2). A violation of
section 9 shall constitute a separate civil offense with respect to each
consumer financial product transaction involved.
(2)Publication of
schedule of penaltiesNot later than December 1, 2009, and
December 1 of each fifth year thereafter, the Commission shall prescribe and
publish in the Federal Register a schedule of the maximum authorized civil
penalty that shall apply for any violation of section 9 that occurs on or after
January 1 of the year immediately following the date of such
publication.
(3)Relevant
factors in determining amount of penaltyIn determining the
amount of any civil penalty in an action for a violation of section 9, the
Commission—
(A)shall
consider—
(i)the
nature of the consumer financial product;
(ii)the severity of
the unreasonable risk to the consumer;
(iii)the number of
products or services sold or distributed;
(iv)the occurrence
or absence of consumer injury; and
(v)the
appropriateness of such penalty in relation to the size of the business of the
person charged; and
(B)shall ensure that
penalties in each case are sufficient to induce compliance by all regulated
entities.
(4)Compromise of
penalty; deductions from penalty
(A)Any civil penalty under this section may be compromised
by the Commission.
(B)In
determining the amount of such penalty or whether it should be remitted or
mitigated and in what amount, the Commission—
(i)shall
consider—
(I)the nature of the
consumer financial product;
(II)the severity of
the unreasonable risk to the consumer;
(III)the number of
offending products or services sold;
(IV)the occurrence
or absence of consumer injury; and
(V)the
appropriateness of such penalty to the size of the business of the person
charged; and
(ii)shall ensure
that compromise penalties remain sufficient to induce compliance by all
regulated entities.
(C)The
amount of a penalty compromised under this paragraph, when finally determined,
or the amount agreed on compromise, may be deducted from any sums owing by the
United States to the person charged.
(c)Collection and
use of penalties
(1)There is established within the Treasury of the United
States a fund, into which shall be deposited all criminal and civil penalties
collected under this section.
(2)The fund established under this subsection shall be used to
defray the costs of the operations of the Commission or, where appropriate,
provide restitution to harmed consumers.
(d)
(1)A person may bring a civil action for a violation of
section 9 for equitable relief and other charges and costs in an amount equal
to the sum of—
(A)any actual
damages sustained by such person as a result of such violation, if actual
damages resulted;
(B)twice the amount
of any finance charge in connection with the transaction, except that such
liability shall not be less than $1,000, such minimum to be adjusted on an
annual basis by the Commission based upon the consumer price index; and
(C)reasonable
attorney fees and costs.
(e)
(1)Any action under this Act may be brought in any
appropriate United States district court, or in any other court of competent
jurisdiction, not later than 2 years after the date of the discovery of the
violation.
(2)This section does not bar a person from asserting a
violation of this Act in an action to collect a debt, or if foreclosure has
been initiated, as a matter of defense by recoupment or set-off. An action
under this Act shall not be the basis for removal of an action to a United
States district court. Neither this section nor any other section of this Act
preempts or otherwise displaces claims and remedies available under State law,
except as otherwise specifically provided in this Act.
(f)State actions
for violations
(1)In addition to such other remedies as are provided under
State law, if the chief law enforcement officer of a State, or an official or
agency designated by a State, has reason to believe that any person has
violated or is violating section 9, the State—
(A)may bring an
action to enjoin such violation in any appropriate United States district court
or in any other court of competent jurisdiction;
(B)may bring an
action on behalf of the residents of the State to recover—
(i)damages for which
the person is liable to such residents under subsection (d) as a result of the
violation; and
(ii)civil penalties,
as established under subsection (b); and
(C)in the case of
any successful action under subparagraph (A) or (B), shall be awarded the costs
of the action and reasonable attorney fees, as determined by the court.
(2)Rights of
Federal regulators
(A)A State shall serve prior written notice of any action
under paragraph (1) upon the Commission and provide the Commission with a copy
of its complaint, except in any case in which such prior notice is not
feasible, in which case the State shall serve such notice immediately upon
instituting such action.
(B)Upon notice of an action under subparagraph (A),
the Commission shall have the right—
(i)to
intervene in the action;
(ii)upon so
intervening, to be heard on all matters arising therein;
(iii)to remove the
action to the appropriate United States district court; and
(iv)to file
petitions for appeal.
(3)For purposes of bringing any action under this subsection,
nothing in this subsection or in any other provision of Federal law shall
prevent the chief law enforcement officer of a State, or an official or agency
designated by a State, from exercising the powers conferred on the chief law
enforcement officer or such official by the laws of such State to conduct
investigations or to administer oaths or affirmations or to compel the
attendance of witnesses or the production of documentary and other
evidence.
(4)Limitation on
State action while Federal action pendingIf the Commission has
instituted a civil action or an administrative action for a violation of
section 9, a State may not, during the pendency of such action, bring an action
under this section against any defendant named in the complaint of the
Commission for any violation of section 9 that is alleged in that
complaint.
11.
(a)The Commission shall determine what reports should be
produced and distributed to the public on a recurring and ad hoc basis, and
shall prepare and publish such reports on a website that provides free access
to the general public.
(b)Report to the
President and Congress
(1)The Commission shall prepare and submit to the President
and the appropriate committees of Congress, at the beginning of each regular
session of Congress, a comprehensive report on the administration of this Act
for the preceding fiscal year.
(2)The reports required by this subsection shall
include—
(A)a thorough
appraisal, including statistical analyses, estimates, and long-term
projections, of the incidence and effects of practices associated with the
provision of consumer financial products that are inconsistent with the
objectives specified in section 5(a), with a breakdown, insofar as practicable,
among the various sources of injury, as the Commission finds
appropriate;
(B)a list of
consumer financial product safety rules prescribed or in effect during such
year;
(C)an evaluation of
the degree of observance of consumer financial product safety rules, including
a list of enforcement actions, court decisions, and compromises of civil
penalties, by location and company name;
(D)a summary of
outstanding problems confronting the administration of this Act in order of
priority;
(E)an analysis and
evaluation of public and private consumer financial product safety research
activities;
(F)a list, with a
brief statement of the issues, of completed or pending judicial actions under
this Act;
(G)the extent to
which technical information was disseminated to the research and consumer
communities and consumer information was made available to the public;
(H)the extent of
cooperation between Commission officials, representatives of the consumer
financial products industry, and other interested parties in the implementation
of this Act, including a log or summary of meetings held between Commission
officials and representatives of industry and other interested parties;
(I)an appraisal of
significant actions of State and local governments relating to the
responsibilities of the Commission;
(J)such
recommendations for additional legislation as the Commission deems necessary to
carry out the purposes of this Act; and
(K)the extent of
cooperation with, and the joint efforts undertaken by, the Commission in
conjunction with other regulators with whom the Commission shares
responsibilities for consumer financial product safety.
12.Authorization
of appropriationsThere are
authorized to be appropriated to the Commission for purposes of carrying out
this Act such sums as may be necessary.