WASHINGTON (AP) -- President Barack Obama asked Congress on Tuesday to create a new agency to police the fine print on consumer products like credit cards and mortgages and determine what fees, penalties and interest rates are fair.
The Consumer Financial Protection Agency would be in charge of regulating those products in the same way other government agencies regulate the safety of drugs, food and toys.
Obama said Americans are demanding it.
"Those ridiculous contracts with pages of fine print that no one can figure out -- those things will be a thing of the past," the president said in a statement accompanying the 152-page draft bill. "And enforcement will be the rule, not the exception."
The CFPA is part of Obama's broader plan to increase oversight of the financial industry and eliminate regulatory gaps believed to have contributed to the economic crisis.
The agency would be dedicated to protecting consumers when buying mortgages, using credit cards and taking out high-rate "payday loans." It also would monitor terms set on savings, checking and debit card accounts, including overdraft charges.
Under the plan, lenders would be required to be up front about their products and compare them to less risky, "plain vanilla" options. The agency potentially could require a kind of warning label on such financial products as mortgages with payments that suddenly balloon in size.
The agency's reach would not extend to investment products like mutual funds and other services already regulated by the federal government. Instead, it would focus on regulating a market that so far has mostly escaped it. Predatory lending is blamed for contributing to the housing crisis that roiled Wall Street and resulted in a $700 billion taxpayer bailout for banks.
Democrats in Congress have embraced the idea of a consumer financial watchdog as a way of showing voters they are on their side during tough economic times.
Republicans and bankers, however, already are balking and gearing up for a fight.
"This isn't only bad government but big brother lurking at everyone's doorstep," said Tom Quaadman, executive director of the U.S. Chamber of Commerce's center for capital markets.
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