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Ad Community Concerned About New Financial Services Agency

The Senate Commerce Committee has scheduled a hearing July 22 on a bill that that has the advertising community worried.

According to its Web site, the committee will hold a morning hearing on "Advertising Trends and Consumer Protection." An ad industry source says the hearing will focus on an administration-backed bill, HR 3126, that would create a new Consumer Financial Protection Agency.

There was a hearing in the House Commerce, Trade and Consumer Protection Subcommittee on the proposal last week. The agency would police the financial services and products markets in the wake of the financial meltdown.

According to the draft of a letter from ad associations being prepared to send to the chair and ranking member of the House Financial Services Committee, the industry is calling for the Congress to slow down and consider all the implications of creating a new agency with "unprecedented power" and "very few checks" on that power.

The chair of the committee is Barney Frank (D-MA), who is also the bill's sponsor.

The associations warn of "dangerous" unintended consequences of the bill in its present form, saying it leaves too many questions about the scope of the agency's power unanswered and essentially left up to the new agency, rather than Congress to define.

Although it was not part of the letter, advertisers are also said to be concerned that the bill gives the FTC more flexibility in promulgating rules against unfair or deceptive practices.

Signatories to the letter, copies of which were being sent to all House members, include the Association of National Advertisers, the American Association of Advertising Agencies, the Direct
Marketers Association, and a number of financial services associations.