[Congressional Record Volume 155, Number 42 (Tuesday, March 10, 2009)]
[Senate]
[Pages S2974-S2979]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Schumer, and Mr. Kennedy):
  S. 566. A bill to create a Financial Product Safety Commission, to 
provide consumers with stronger protections and better information in 
connection with consumer financial products, and to give providers of 
consumer financial products more regulatory certainty; to the Committee 
on Banking, Housing, and Urban Affairs.
  Mr. DURBIN. When consumers purchase tangible consumer products such 
as toasters or televisions, they can be reasonably confident that the 
products are safe for their families to use. In America we don't say 
``buyer beware'' when it comes to lead paint in toys or risky drugs. 
But when Americans purchase financial products such as mortgages or 
credit cards, they often have little idea whether those products --and 
the mountain of fine print that come with them--are good for their 
families. Why?
  The answer is that consumer products are subject to oversight, while 
financial products are not. Professor Elizabeth Warren, Chairperson of 
the Congressional Oversight Panel for the $700 billion Troubled Assets 
Relief Program, was right when she said ``we need more oversight.'' 
That was more than a year ago.

[[Page S2975]]

  Today there are no fewer than 10 Federal regulators with 
responsibility for consumer protections from predatory or deceptive 
financial products, but none have oversight as its primary objective.
  The legislation that I am introducing today with Senators Schumer and 
Kennedy would create a Financial Product Safety Commission that would 
focus exclusively on the interests of consumers. I am pleased that 
Congressmen Bill Delahunt and Brad Miller will be introducing the House 
companion.
  The objectives of the Financial Product Safety Commission would be to 
reduce consumer risk in using financial products, coordinate 
enforcement with other Federal and State regulators, and report to the 
public regarding the state of consumer financial product safety.
  The Financial Product Safety Commission would fulfill that mission by 
preventing predatory and deceptive financial practices, educating 
consumers on the responsible use of financial products and services, 
establishing a regulatory floor beneath which consumer financial 
product safety could not fall, and recommending the steps that should 
be taken to improve the value of financial products for consumers.
  The bill is supported by over 55 national and State organizations, 
including Consumer Federation of America, Center for Responsible 
Lending Leadership Conference on Civil Rights, NAACP, La Raza, AFL-CIO, 
SEIU, National Consumer Law Center, Consumers Union, Public Citizen, 
and U.S. PIRG. I include a statement of support for the Record.
  As Congress embarks on financial regulatory reform, our improved 
regulatory system must focus not just on the safety and soundness of 
the providers of financial products but also on the safety of the 
consumers of financial products. The Financial Product Safety 
Commission will do just that.
  Mr. President, I ask unanimous consent that the text of the bill and 
supporting material be printed in the Record.
  There being no objection, the material was ordered to be placed in 
the Record, as follows:

                                 S. 566

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Financial 
     Product Safety Commission Act of 2009''.
       (b) Table of Contents.--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.

     SEC. 2. FINDINGS.

       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.

     SEC. 3. DEFINITIONS.

       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).

     SEC. 4. ESTABLISHMENT OF COMMISSION.

       (a) Establishment; Chairperson.--
       (1) Establishment.--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) Membership.--
       (A) In general.--The Commission shall be comprised of 5 
     commissioners, appointed by the President, by and with the 
     advice and consent of the Senate.
       (B) Considerations.--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) Chairperson.--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) Removal.--Any Commissioner may be removed by the 
     President for neglect of duty or malfeasance in office, but 
     for no other cause.
       (b) Term; Vacancies.--
       (1) In general.--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) Limitations.--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) Political affiliation.--Not more than 3 Commissioners 
     may be affiliated with the same political party.
       (2) Conflicts of interest.--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) Vacancies.--No vacancy on the Commission shall impair 
     the right of the remaining Commissioners to exercise all the 
     powers of the Commission.
       (2) Quorum.--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) Seal.--The Commission shall have an official seal, of 
     which judicial notice shall be taken.
       (4) Vice chairperson.--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) Offices.--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) Duties.--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--

[[Page S2976]]

       (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) Governance.--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 appropriations.--Requests 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 Comments.--Not 
     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.

     SEC. 5. OBJECTIVES AND RESPONSIBILITIES.

       (a) Objectives.--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) Responsibilities.--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.

     SEC. 6. COORDINATION OF ENFORCEMENT.

       (a) In General.--Notwithstanding any concurrent or similar 
     authority of any other agency, the Commission shall enforce 
     the requirements of this Act.
       (b) Rule of Construction.--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) Agency Authority.--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 Agencies.--The 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 Rulemaking.--Any 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.

     SEC. 7. AUTHORITIES.

       (a) Authority To Conduct Hearings or Other Inquiries.--
       (1) In general.--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) Member participation.--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) Notice required.--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; Orders.--The 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

[[Page S2977]]

     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 Order.--If 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 Information.--No 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 Data.--The 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 
     Commission.--For 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) Contract Authority.--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 congress.--Whenever 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 recommendation.--Whenever 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.

     SEC. 8. COLLABORATION WITH FEDERAL AND STATE ENTITIES.

       (a) Preemption.--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) In general.--The Commission shall establish a program 
     to promote cooperation between the Federal Government and 
     State governments for purposes of carrying out this Act.
       (2) Authorities.--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 Agencies.--The 
     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.

     SEC. 9. PROHIBITED ACTS.

       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.

     SEC. 10. ENFORCEMENT.

       (a) Criminal Penalties.--
       (1) Knowing and willful violations.--Any 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) Executives and agents.--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) Civil Penalties.--
       (1) In general.--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 penalties.--Not 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 penalty.--In 
     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) In general.--Any civil penalty under this section may 
     be compromised by the Commission.
       (B) Considerations.--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) Amount.--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) Establishment of fund.--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) Use of fund.--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) Private Enforcement.--
       (1) In general.--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) Jurisdiction.--
       (1) In general.--Any action under this Act may be brought 
     in any appropriate United

[[Page S2978]]

     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) Rules of construction.--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) Authority of states.--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) Notice of state action.--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) Commission authorization.--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) Investigatory powers.--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 
     pending.--If 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.

     SEC. 11. REPORTS.

       (a) Reports to the Public.--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) In general.--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) Report content.--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.

     SEC. 12. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to the Commission 
     for purposes of carrying out this Act such sums as may be 
     necessary.
                                  ____


  56 Diverse National, State Organizations Support Financial Product 
                           Safety Commission

     Hon. Richard J. Durbin
     Majority Whip, U.S. Senate
     Washington, DC.
     Hon. William Delahunt
     House of Representatives
     Washington, DC.
     Hon. Charles Schumer
     U.S. Senate
     Washington, DC.
     Hon. Brad Miller
     House of Representatives
     Washington, DC.
       Dear Senators Durbin and Schumer and Representatives 
     Delahunt and Miller: The undersigned organizations strongly 
     support your legislation to create a federal Financial 
     Product Safety Commission (FPSC) that would ensure the 
     fairness, safety and sustainability of credit and payment 
     products. It is now widely accepted that the current 
     international economic crisis was triggered by the failure of 
     federal regulators to stop abusive lending, particularly in 
     the housing sector. By creating a separate agency focused 
     exclusively on credit safety, your legislation will not only 
     better protect consumers, but the entire economy.
       Under this legislation, the FPSC would be empowered to 
     ensure that credit and payment products do not have predatory 
     or deceptive features that can harm consumers or lock them 
     into unaffordable loans, such as pre-payment penalties, 
     unjustified fees, or hair-trigger interest rate increases. 
     The agency would also conduct ongoing research and 
     investigation into credit industry products and services. In 
     addition, it would provide consumers with high-quality 
     information about how to avoid abusive lending or credit 
     problems. This approach offers two crucial improvements over 
     the current splintered, ineffectual regulatory system:
       A FPSC would put consumer protection first. Federal 
     regulatory agencies have often treated consumer protection as 
     less important than or even in conflict with their mission to 
     ensure the safety and soundness of financial institutions. In 
     addition, the independence of regulators like the Office of 
     the Comptroller of the Currency and Office of Thrift 
     Supervision has been threatened because they are directly and 
     almost entirely funded by the institutions they oversee. As a 
     result, federal agencies dithered for years in implementing 
     regulations to stop unfair and deceptive mortgage and credit 
     card lending practices, finally producing only after the 
     current foreclosure and consumer debt crisis took hold. 
     Regulators have left other types of dangerous products 
     completely untouched, such as high-cost ``overdraft'' loans 
     that are triggered without consumer permission. The FPSC 
     would be required to make consumer protection its top 
     priority, which will also better ensure the soundness of 
     financial institutions.
       A FPSC would stop regulatory agencies from competing among 
     themselves to lower standards. Right now, financial 
     institutions freely switch charters between federal and state 
     regulation, and between various federal charters, in order 
     to reduce the level of oversight and the costs associated 
     with it. Under a FPSC, regulated institutions could not 
     choose the agency that regulates them. The FPSC would be 
     empowered to establish federal minimum standards for all 
     credit products and the institutions that offer them, so 
     that competition between state and federal regulators 
     would only exist to improve the quality of consumer 
     protection.
       Unless the structure of financial services regulation is 
     realigned to change not just the focus of regulation but its 
     underlying philosophy, it is unlikely that consumers will be 
     adequately protected from unfair or dangerous credit products 
     in the future. The ultimate result of this crucial 
     legislation would be an agency designed to protect consumers 
     from the corrosive effects of unsafe credit, which has a 
     regulatory perspective that is truly independent of the 
     institutions it regulates. Just as importantly, this agency 
     would not be under constant pressure to keep protection 
     standards low. You have created a template for regulatory 
     modernization that will protect consumers, financial 
     institutions and the economy for years to come.
       We applaud your leadership on this issue and look forward 
     to working with you to enact this proposal.
           Sincerely,
       Gregory L. Jefferson, Sr., Legislative Representative, 
     American Federation of Labor

[[Page S2979]]

     and Congress of Industrial Organizations (AFL-CIO).
       Jim Campen, Executive Director, Americans for Fairness in 
     Lending.
       Linda Sherry, Director, National Priorities, Consumer 
     Action.
       Mike Calhoun, President, Center for Responsible Lending.
       Travis Plunkett, Legislative Director, Consumer Federation 
     of America.
       Rosemary Shahan, President, Consumers for Auto Reliability 
     and Safety.
       Pamela Banks, Policy Counsel, Consumers Union.
       Tamara Draut, Vice President of Policy & Programs, Demos.
       Alan Reuther, Legislative Director, International Union, 
     United Automobile, Aerospace & Agricultural Implement Workers 
     of America (UAW).
       Wade Henderson, President & CEO, Leadership Conference on 
     Civil Rights.
       Hilary O. Shelton, Vice President for Advocacy/Director, 
     NAACP Washington Bureau.
       Ricardo C. Byrd, Executive Director, National Association 
     of Neighborhoods.
       John Taylor, President and CEO, National Community 
     Reinvestment Coalition.
       Lauren Saunders, Managing Attorney, National Consumer Law 
     Center.
       Sally Greenberg, Executive Director, National Consumers 
     League.
       Janis Bowdler, Associate Director, Wealth-Building Policy 
     Project, National Council of La Raza.
       Shanna L. Smith, President and CEO, National Fair Housing 
     Alliance.
       David Arkush, Director, Public Citizen's Congress Watch.
       Alison Reardon, Director of Legislation, Service Employees 
     International Union.
       Ed Mierzwinski, Consumer Programs Director, U.S. PIRG.


                          State Organizations

       Kimble Forrister, Statewide Coordinator, Alabama Arise
       Leslie Kyman Cooper, Executive Director, Phyllis Rowe, 
     President Emeritus, Arizona Consumers Council
       Diane E. Brown, Executive Director, Arizona PIRG
       Albert Sterman, Secretary/Treasurer, Democratic Processes 
     Center, Arizona
       H. C. ``Hank'' Klein, Founder, Arkansans Against Abusive 
     Payday Lending
       Alan Fisher, Executive Director, California Reinvestment 
     Coalition
       Jim Bliesner, Director, San Diego City/County Reinvestment 
     Task Force, California
       Lynn Drysdale, Managing Attorney, Consumer Law Unit, 
     Jacksonville Area Legal Aid, Inc., Florida
       Bill Newton, Executive Director, Florida Consumer Action 
     Network
       Brad Ashwell, Consumer & Public Health Advocate, Florida 
     Public Interest Research Group
       Dan McCurry, Coordinator, Chicago Consumer Coalition, 
     Illinois
       Lynda DeLaforgue and William McNary, Co-Executive 
     Directors, Citizen Action/Illinois
       Brian C. White, Executive Director, Lakeside Community 
     Development Corporation, Illinois
       Rose Mary Meyer, Director, Project IRENE, Illinois
       Larry M. McGuire, Field Missionary Coordinator, Community 
     of Christ and Inter-Religious Council of Linn County, Iowa
       Jason Selmon, Executive Director, Sunflower Community 
     Action, Kansas
       Richard Seckel, Director, Kentucky Equal Justice Center
       Charles Shafer, President, Maryland Consumer Rights 
     Coalition
       Debra Gardner, Legal Director, Public Justice Center, 
     Maryland
       Paul Schlaver, Chair, Massachusetts Consumers' Coalition
       Paheadra B. Robinson, Staff Attorney, Mississippi Center 
     for Justice
       Mike Cherry, President/CEO, Consumer Credit Counseling of 
     Springfield, Missouri, Inc.
       Dan L. Wulz, Deputy Executive Director, Legal Aid Center of 
     Southern Nevada, Inc.
       Peter Skillern, Executive Director, Community Reinvestment 
     Association of North Carolina
       Al Ripley, Counsel for Consumer and Housing Affairs, NC 
     Justice Center
       Jim McCarthy, President/CEO, Miami Valley Fair Housing 
     Center, Inc., Ohio
       Sue Berkowitz, Director, South Carolina Appleseed Legal 
     Justice Center
       Corky Neale, Director of Research, Memphis Responsible 
     Lending Collaborative, Tennessee
       Don E. Baylor, Jr., Senior Policy Analyst--Economic 
     Opportunity, Center for Public Policy Priorities, Texas
       Alex R. Gulotta, Executive Director, Legal Aid Justice 
     Center, Virginia
       Michael H. Lane and Ward R Scull, Co-Founders, Virginians 
     Against Payday Loans
       Irene E. Leech, President, Virginia Citizens Consumer 
     Council
       Janice ``Jay'' Johnson, Chairperson, Virginia Organizing 
     Project
       James W. (Jay) Speer, Executive Director, Virginia Poverty 
     Law Center
       Bruce D. Neas, Legislative Coordinator, Columbia Legal 
     Services on behalf of clients, Washington
       Catherine M. Doyle, Chief Staff Attorney, Legal Aid Society 
     of Milwaukee, Inc., Milwaukee, Wisconsin

                          ____________________