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Ad Community Concerned About New Financial Services Agency

The House Financial Services Committee is holding a hearing next week on a bill that has the advertising community worried.

The bill is the administration-backed H.R. 3126, which 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 to the chair and ranking member of the House Financial Services Committee, the industry is calling for the Congress to take its time 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 it 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 and enforcing rules against unfair or deceptive practices, as well as subsuming some of the FTC's authority and giving it to the new agency.

"When you are transplanting vital organs from one organization to another, you obviously must do this extremely carefully or both patients might be severey injured," says Dan Jaffe, executive vp of the Association of National Advertisers (ANA).

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