Obama and Congressional Democrats are working to create a Consumer Financial Protection Agency, “which is designed to regulate credit card fees and other forms of consumer credit that get comparatively little oversight from existing federal agencies.”
A good idea, of course, but there’s one area of concern:
[A]s the House of Representatives drafts its version of legislation to create the new agency, a broad coalition of groups are concerned that lawmakers may ignore a burgeoning form of alternative loans: those that for-profit colleges make directly to students to fill gaps in their ability to pay.
They are urging Congressional Democrats to clarify that a planned exemption in the bill designed to shield local merchants from excessive regulation would not apply to publicly traded higher education companies that are directly giving students tens of millions of dollars in small loans, often structured as consumer financing rather than student loans, and sometimes at double digit interest rates.
These groups have already sent Rep. Barney Frank (D-MA), chair of the House Financial Services Committee, a letter (PDF) outlining their concerns.