Now that President Obama has proposed a Consumer Financial Protection Agency, the question will be how powerful that agency will be. The President says the new agency will have the power to set standards for financial products. The agency would have the ability to put an end to exotic mortgages with exploding costs, and President Obama promises "home mortgage disclosures will be reasonable, clearly written, and concise."

Twenty of the eighty eight pages of the Treasury's Financial Regulatory reform plan are dedicated to the consumer protection piece of the plan. It envisions an agency with broad jurisdiction to protect consumers in credit, savings, and payment products. It would interpret regulations like the Truth in Lending Act, Real Estate Settlement and Procedures Act, and the Community Reinvestment Act. The federal agency would not pre-empt states that adopt and enforce stricter laws. It would collect and track consumer complaints. Washington Research Group analyst Jaret Seiberg asked Treasury officials if the new agency would set caps on interest rates for credit cards or other products. They said no.

The industry is geared up to fight the creation of a new agency. Some lawmakers are on the same page. Rep. Jeb Hensarling (R-Texas), who sits on the TARP oversight panel says, "We need smarter regulation, not just more regulation."