I 

111TH CONGRESS 

1ST SESSION H. R. 1705 

To create a Financial Product Safety Commission, to provide consumers 

with stronger protections and better information in connection with consumer financial products, and to give providers of consumer financial 

products more regulatory certainty. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 25, 2009 

Mr. DELAHUNT (for himself and Mr. MILLER of North Carolina) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To create a Financial Product Safety Commission, to provide 

consumers with stronger protections and better information in connection with consumer financial products, and 

to give providers of consumer financial products more 

regulatory certainty. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Financial Product Safety Commission Act of 2009’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 


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Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

Sec. 3. Definitions. 

Sec. 4. Establishment of Commission. 

Sec. 5. Objectives and responsibilities. 

Sec. 6. Coordination of enforcement. 

Sec. 7. Authorities. 

Sec. 8. Collaboration with Federal and State entities. 

Sec. 9. Prohibited acts. 

Sec. 10. Enforcement. 

Sec. 11. Reports. 

Sec. 12. Authorization of appropriations. 

1 SEC. 2. FINDINGS. 

2 Congress finds that— 

3 (1) the Nation’s multiagency financial services 

4 regulatory structure has created a dispersion of reg5 ulatory responsibility, which in turn has led to an in6 adequate focus on protecting consumers from inap7 propriate consumer financial products and practices; 

8 (2) the absence of appropriate oversight has al9 lowed excessively costly or predatory consumer fi10 nancial products and practices to flourish; and 

11 (3) the creation of a regulator whose sole focus 

12 is the safety of consumer financial products would 

13 help address this lack of consumer protection. 

14 SEC. 3. DEFINITIONS. 

15 For purposes of this Act, the following definitions 

16 shall apply: 

17 (1) COMMISSION, CHAIRPERSON, AND COMMIS18 SIONER.—The terms ‘‘Commission’’, ‘‘Chairperson’’, 

19 and ‘‘Commissioner’’ mean the Financial Product 

20 Safety Commission established under this Act and 


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1 the Chairperson and any Commissioner thereof, re2 spectively. 

3 (2) CONSUMER FINANCIAL PRODUCT.—The 

4 term ‘‘consumer financial product’’ includes— 

5 (A) any extension of credit, deposit ac6 count, payment mechanism, or other product or 

7 service within the scope of— 

8 (i) the Truth in Savings Act (12 

9 U.S.C. 4301 et seq.); 

10 (ii) the Consumer Credit Protection 

11 Act (15 U.S.C. 1601 et seq.); or 

12 (iii) article 3 (relating to negotiable 

13 instruments) or article 4 (relating to bank 

14 deposits) of the Uniform Commercial Code, 

15 as in effect in any State; 

16 (B) any other extension of credit, deposit 

17 account, or payment mechanism; and 

18 (C) any ancillary product, practice, or 

19 transaction. 

20 (3) APPROPRIATE COMMITTEES OF THE CON21 GRESS.—The term ‘‘appropriate committees of Con22 gress’’ means the Committee on Banking, Housing, 

23 and Urban Affairs and the Subcommittee on Finan24 cial Services and General Government of the Com25 mittee on Appropriations of the Senate, and the 


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1 Committee on Financial Services and the Sub2 committee on Financial Services and General Gov3 ernment of the Committee on Appropriations of the 

4 House of Representatives, and any successor com5 mittees, as may be constituted. 

6 (4) CONSUMER.—The term ‘‘consumer’’ means 

7 any individual and any small business concern, as 

8 defined in section 3 of the Small Business Act (15 

9 U.S.C. 632). 

10 (5) CREDIT.—The term ‘‘credit’’ has the same 

11 meaning as in section 103 of the Truth in Lending 

12 Act (15 U.S.C. 1602). 

13 SEC. 4. ESTABLISHMENT OF COMMISSION. 

14 (a) ESTABLISHMENT; CHAIRPERSON.— 

15 (1) ESTABLISHMENT.—There is established the 

16 ‘‘Financial Product Safety Commission’’ which shall 

17 be an independent establishment, as defined in sec18 tion 104(1) of title 5, United States Code. 

19 (2) MEMBERSHIP.— 

20 (A) IN GENERAL.—The Commission shall 

21 be comprised of 5 commissioners, appointed by 

22 the President, by and with the advice and con23 sent of the Senate. 

24 (B) CONSIDERATIONS.—In making ap25 pointments to the Commission, the President 


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1 shall consider individuals who, by reason of 

2 their background and expertise in areas related 

3 to consumer financial product safety, are quali4 fied to serve as members of the Commission. 

5 (3) CHAIRPERSON.—The Chairperson of the 

6 Commission shall be appointed by the President, by 

7 and with the advice and consent of the Senate, from 

8 among the members of the Commission. 

9 (4) REMOVAL.—Any Commissioner may be re10 moved by the President for neglect of duty or mal11 feasance in office, but for no other cause. 

12 (b) TERM; VACANCIES.— 

13 (1) IN GENERAL.—Except as provided in para14 graph (2)— 

15 (A) the Commissioners first appointed 

16 under this section shall be appointed for terms 

17 ending 3, 4, 5, 6, and 7 years, respectively, 

18 after the date of enactment of this Act, the 

19 term of each to be designated by the President 

20 at the time of nomination; and 

21 (B) each of their successors shall be ap22 pointed for a term of 5 years from the date of 

23 the expiration of the term for which the prede24 cessor was appointed. 


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1 (2) LIMITATIONS.—Any Commissioner ap2 pointed to fill a vacancy occurring prior to the expi3 ration of the term for which the predecessor thereof 

4 was appointed shall be appointed only for the re5 mainder of such term. A Commissioner may con6 tinue to serve after the expiration of such term until 

7 a successor has taken office, except that such Com8 missioner may not continue to serve more than 1 

9 year after the date on which the term of that Com10 missioner would otherwise expire under this sub11 section. 

12 (c) RESTRICTIONS ON OUTSIDE ACTIVITIES.— 

13 (1) POLITICAL AFFILIATION.—Not more than 3 

14 Commissioners may be affiliated with the same polit15 ical party. 

16 (2) CONFLICTS OF INTEREST.—No individual 

17 may serve as a Commissioner if that individual— 

18 (A) is in the employ of, holding any official 

19 relation to, or married to any person engaged 

20 in selling or devising consumer financial prod21 ucts; 

22 (B) owns stock or bonds of substantial 

23 value in a person so engaged; 

24 (C) is in any other manner pecuniarily in25 terested in a person so engaged; or 


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1 (D) engages in any other business, voca2 tion, or employment. 

3 (d) VACANCIES; QUORUM; SEAL; VICE CHAIR4 PERSON.— 

5 (1) VACANCIES.—No vacancy on the Commis6 sion shall impair the right of the remaining Commis7 sioners to exercise all the powers of the Commission. 

8 (2) QUORUM.—Three members of the Commis9 sion shall constitute a quorum for the transaction of 

10 business, except that— 

11 (A) if there are only 3 members serving on 

12 the Commission because of vacancies on the 

13 Commission, 2 members of the Commission 

14 shall constitute a quorum for the transaction of 

15 business; and 

16 (B) if there are only 2 members serving on 

17 the Commission because of vacancies on the 

18 Commission, 2 members shall constitute a 

19 quorum for the 6-month period (or the 1-year 

20 period, if the 2 members are not affiliated with 

21 the same political party) beginning on the date 

22 of the vacancy which caused the number of 

23 Commissioners to decline to 2. 

24 (3) SEAL.—The Commission shall have an offi25 cial seal, of which judicial notice shall be taken. 


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1 (4) VICE CHAIRPERSON.—The Commission 

2 shall annually elect a Vice Chairperson to act in the 

3 absence or disability of the Chairperson or in case 

4 of a vacancy in the office of the Chairperson. 

5 (e) OFFICES.—The Commission shall maintain a 

6 principal office and such field offices as it determines nec7 essary, and may meet and exercise any of its powers at 

8 any other place. 

9 (f) FUNCTIONS OF CHAIRPERSON; REQUEST FOR AP10 PROPRIATIONS.— 

11 (1) DUTIES.—The Chairperson shall be the 

12 principal executive officer of the Commission, and 

13 shall exercise all of the executive and administrative 

14 functions of the Commission, including functions of 

15 the Commission with respect to— 

16 (A) the appointment and supervision of 

17 personnel employed by the Commission (and the 

18 Commission shall fix their compensation at a 

19 level comparable to that for employees of the 

20 Securities and Exchange Commission); 

21 (B) the distribution of business among per22 sonnel appointed and supervised by the Chair23 person and among administrative units of the 

24 Commission; and 

25 (C) the use and expenditure of funds. 


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1 (2) GOVERNANCE.—In carrying out any of the 

2 functions of the Chairperson under this subsection, 

3 the Chairperson shall be governed by general policies 

4 of the Commission and by such regulatory decisions, 

5 findings, and determinations as the Commission 

6 may, by law, be authorized to make. 

7 (3) REQUESTS FOR APPROPRIATIONS.—Re8 quests or estimates for regular, supplemental, or de9 ficiency appropriations on behalf of the Commission 

10 may not be submitted by the Chairperson without 

11 the prior approval of a majority vote of the Commis12 sion. 

13 (g) AGENDA AND PRIORITIES; ESTABLISHMENT AND

14 COMMENTS.—Not later than 30 days before the beginning 

15 of each fiscal year, the Commission shall establish an 

16 agenda for Commission action under its jurisdiction and, 

17 to the extent feasible, shall establish priorities for such 

18 actions. Before establishing such agenda and priorities, 

19 the Commission shall conduct a public hearing on the 

20 agenda and priorities, and shall provide reasonable oppor21 tunity for the submission of comments. 

22 SEC. 5. OBJECTIVES AND RESPONSIBILITIES. 

23 (a) OBJECTIVES.—The objectives of the Commission 

24 are— 


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1 (1) to minimize unreasonable consumer risk as2 sociated with buying and using consumer financial 

3 products; 

4 (2) to prevent and eliminate practices that lead 

5 consumers to incur unreasonable, inappropriate, or 

6 excessive debt, or make it difficult for consumers to 

7 repay existing debt, including practices or product 

8 features that are abusive, fraudulent, unfair, decep9 tive, predatory, anticompetitive, or otherwise incon10 sistent with consumer protection; 

11 (3) to promote practices that assist and encour12 age consumers to use credit and consumer financial 

13 products responsibly, avoid excessive debt, and avoid 

14 unnecessary or excessive charges derived from or as15 sociated with consumer financial products; 

16 (4) to ensure that providers of consumer finan17 cial products provide credit based on the ability of 

18 the consumer to repay the debt incurred; 

19 (5) to ensure that consumer credit history is 

20 maintained, reported, and used fairly and accurately; 

21 (6) to maintain strong privacy protections for 

22 consumer transactions, credit history, and other per23 sonal information associated with the use of con24 sumer financial products; 


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1 (7) to collect, investigate, resolve, and inform 

2 the public about consumer complaints regarding con3 sumer financial products; 

4 (8) to ensure a fair resolution of consumer dis5 putes regarding consumer financial products; and 

6 (9) to take such other steps as are reasonable 

7 to protect users of consumer financial products. 

8 (b) RESPONSIBILITIES.—The Commission shall— 

9 (1) promulgate consumer financial product 

10 safety rules that— 

11 (A) ban abusive, fraudulent, unfair, decep12 tive, predatory, anticompetitive, or otherwise 

13 anticonsumer practices, products, or product 

14 features; 

15 (B) place reasonable restrictions on con16 sumer financial products, practices, or product 

17 features to reduce the likelihood that they may 

18 be provided in a manner that is inconsistent 

19 with the objectives specified in subsection (a); 

20 and 

21 (C) establish requirements for such clear 

22 and adequate warnings or other information, 

23 and the form and manner of delivery of such 

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1 propriate to advance the objectives specified in 

2 subsection (a); 

3 (2) establish and maintain a best practices 

4 guide for all providers of consumer financial prod5 ucts; 

6 (3) conduct such continuing studies and inves7 tigations of consumer financial products industry 

8 practices as it determines necessary; 

9 (4) award grants or enter into contracts for the 

10 conduct of such studies and investigations with any 

11 person (including a governmental entity), as nec12 essary to advance the objectives specified in sub13 section (a); 

14 (5) following publication of a rule, assist public 

15 and private organizations or groups of consumer fi16 nancial product providers, administratively and tech17 nically, in the development of safety standards or 

18 guidelines that would assist such providers in com19 plying with such rule; 

20 (6) comment on selected rulemakings of agen21 cies designated in section 6(d) affecting consumer fi22 nancial products; and 

23 (7) establish and operate a consumer financial 

24 product customer hotline which consumers can call 


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1 to register complaints and receive information on 

2 how to combat anticonsumer products or practices. 

3 (c) STATE REGULATION OF THE BUSINESS OF IN4 SURANCE.—The Act entitled ‘‘An Act to express the intent 

5 of Congress with reference to the regulation of the busi6 ness of insurance’’ and approved March 9, 1945 (15 

7 U.S.C. 1011 et seq.) (commonly referred to as the 

8 ‘‘McCarran-Ferguson Act’’) remains the law of the United 

9 States. 

10 SEC. 6. COORDINATION OF ENFORCEMENT. 

11 (a) IN GENERAL.—Notwithstanding any concurrent 

12 or similar authority of any other agency, the Commission 

13 shall enforce the requirements of this Act. 

14 (b) RULE OF CONSTRUCTION.—The authority grant15 ed to the Commission to make and enforce rules under 

16 this Act shall not be construed to impair the authority 

17 of any other Federal department or agency to make and 

18 enforce rules under any other provision of law, provided 

19 that any portion of any rule promulgated by any other 

20 such department or agency that conflicts with a rule pro21 mulgated by the Commission and that is less protective 

22 of consumers than the rule promulgated by the Commis23 sion shall be superseded by the rule promulgated by the 

24 Commission, to the extent of the conflict. Any portion of 

25 any rule promulgated by any other such department or 


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1 agency that is not superseded by a rule promulgated by 

2 the Commission shall remain in force without regard to 

3 this Act. 

4 (c) AGENCY AUTHORITY.—Any department or agen5 cy designated in subsection (d) may exercise, for the pur6 pose of enforcing compliance with any requirement im7 posed under this Act, any authority conferred on such de8 partment or agency by any other Act. 

9 (d) DESIGNATED DEPARTMENTS AND AGENCIES.— 

10 The departments and agencies designated in this sub11 section are— 

12 (1) the Board of Governors of the Federal Re13 serve System; 

14 (2) the Federal Deposit Insurance Corporation; 

15 (3) the Comptroller of the Currency; 

16 (4) the Director of the Office of Thrift Super17 vision; 

18 (5) the National Credit Union Administration; 

19 (6) the Federal Housing Finance Authority; 

20 (7) the Federal Housing Administration; 

21 (8) the Secretary of Housing and Urban Devel22 opment; 

23 (9) the Federal Trade Commission; and 


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1 (10) any successor to the agencies, referred to 

2 in paragraphs (1) through (9), as may be con3 stituted. 

4 (e) COORDINATION OF RULEMAKING.—Any depart5 ment or agency designated in subsection (d) that engages 

6 in a rulemaking affecting consumer financial products 

7 shall consult with the Commission in the promulgation of 

8 such rules. 

9 SEC. 7. AUTHORITIES. 

10 (a) AUTHORITY TO CONDUCT HEARINGS OR OTHER

11 INQUIRIES.— 

12 (1) IN GENERAL.—The Commission may, by 1 

13 or more of its members, or by such agents or agency 

14 as it may designate, conduct any hearing or other 

15 inquiry necessary or appropriate to its functions 

16 anywhere in the United States. 

17 (2) MEMBER PARTICIPATION.—A Commissioner 

18 who participates in a hearing, or other inquiry de19 scribed in paragraph (1), shall not be disqualified 

20 solely by reason of such participation from subse21 quently participating in a decision of the Commis22 sion in the same matter. 

23 (3) NOTICE REQUIRED.—The Commission shall 

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1 tunity for interested persons to present relevant tes2 timony and data. 

3 (b) COMMISSION POWERS; ORDERS.—The Commis4 sion shall have the power— 

5 (1) to require, by special or general orders, any 

6 person to submit in writing such reports and an7 swers to questions as the Commission may prescribe 

8 to carry out a specific regulatory or enforcement 

9 function of the Commission, and such submission 

10 shall be made within such reasonable period and 

11 under oath or otherwise as the Commission may de12 termine, and such order shall contain a complete 

13 statement of the reasons that the Commission re14 quires the report or answers specified in the order 

15 to carry out a specific regulatory or enforcement 

16 function of the Commission; 

17 (2) to administer oaths; 

18 (3) to require by subpoena the attendance and 

19 testimony of witnesses and the production of all doc20 umentary evidence relating to the execution of its 

21 duties; 

22 (4) in any proceeding or investigation to order 

23 testimony to be taken by deposition before any per24 son who is designated by the Commission and has 

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1 stances, to compel testimony and the production of 

2 evidence in the same manner as authorized under 

3 paragraph (3); 

4 (5) to pay witnesses the same fees and mileage 

5 costs as are paid in like circumstances in the courts 

6 of the United States; 

7 (6) to accept voluntary and uncompensated 

8 services relevant to the performance of the duties of 

9 the Commission, notwithstanding the provisions of 

10 section 1342 of title 31, United States Code, and to 

11 accept voluntary and uncompensated services (but 

12 not gifts) relevant to the performance of the duties 

13 of the Commission provided that any such services 

14 shall not be from parties that have or are likely to 

15 have business before the Commission; 

16 (7) to— 

17 (A) issue an order requiring compliance 

18 with applicable legal requirements; 

19 (B) issue a civil penalty order in accord20 ance with section 10(b); 

21 (C) initiate, prosecute, defend, intervene 

22 in, or appeal (other than to the Supreme Court 

23 of the United States), through its own legal 

24 representative and in the name of the Commis25 sion, any civil action, if the Commission makes 


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1 a written request to the Attorney General of the 

2 United States for representation in such civil 

3 action and the Attorney General does not, with4 in the 45-day period beginning on the date on 

5 which such request was made, notify the Com6 mission in writing that the Attorney General 

7 will represent the Commission in such civil ac8 tion; and 

9 (D) whenever the Commission obtains evi10 dence that any person has engaged in conduct 

11 that may constitute a violation of Federal 

12 criminal law, including a violation of section 9, 

13 transmit such evidence to the Attorney General 

14 of the United States; and 

15 (8) to delegate any of its functions or powers, 

16 other than the power to issue subpoenas under para17 graph (3), to any officer or employee of the Commis18 sion. 

19 (c) NONCOMPLIANCE WITH SUBPOENA OR COMMIS20 SION ORDER.—If a person refuses to obey a subpoena or 

21 order of the Commission issued under subsection (b), the 

22 Commission (subject to subsection (b)(7)) or the Attorney 

23 General of the United States may bring an action in the 

24 United States district court for the district and division 

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1 priate United States district court seeking an order requir2 ing compliance with the subpoena or order. 

3 (d) DISCLOSURE OF INFORMATION.—No person shall 

4 be subject to civil liability to any person (other than the 

5 Commission or the United States) for disclosing informa6 tion to the Commission. 

7 (e) CUSTOMER AND REVENUE DATA.—The Commis8 sion may, by rule, require any provider of consumer finan9 cial products to provide to the Commission such customer 

10 and revenue data as may be required to carry out this 

11 Act. 

12 (f) PURCHASE OF CONSUMER FINANCIAL PRODUCTS

13 BY COMMISSION.—For purposes of carrying out this Act, 

14 the Commission may purchase any consumer financial 

15 product and it may require any provider of consumer fi16 nancial products to sell the product to the Commission at 

17 cost. 

18 (g) CONTRACT AUTHORITY.—The Commission is au19 thorized to enter into contracts with governmental entities, 

20 private organizations, or individuals for the conduct of ac21 tivities authorized by this Act. 

22 (h) BUDGET ESTIMATES AND REQUESTS; LEGISLA23 TIVE RECOMMENDATIONS; TESTIMONY; COMMENTS ON

24 LEGISLATION.— 


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1 (1) BUDGET COPIES TO CONGRESS.—Whenever 

2 the Commission submits any budget estimate or re3 quest to the President or the Office of Management 

4 and Budget, it shall concurrently transmit a copy of 

5 that estimate or request to the appropriate commit6 tees of Congress. 

7 (2) LEGISLATIVE RECOMMENDATION.—When8 ever the Commission submits any legislative rec9 ommendations, testimony, or comments on legisla10 tion to the President or the Office of Management 

11 and Budget, it shall concurrently transmit a copy 

12 thereof to the appropriate committees of Congress. 

13 No officer or agency of the United States shall have 

14 any authority to require the Commission to submit 

15 its legislative recommendations, testimony, or com16 ments on legislation, to any officer or agency of the 

17 United States for approval, comments, or review, 

18 prior to the submission of such recommendations, 

19 testimony, or comments to the appropriate commit20 tees of Congress. 

21 SEC. 8. COLLABORATION WITH FEDERAL AND STATE ENTI22 TIES. 

23 (a) PREEMPTION.—Nothing in this Act or any rule 

24 promulgated under this Act may be construed to annul, 

25 alter, affect, or exempt any person from complying with 


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1 the laws of any State, except to the extent that those laws 

2 are inconsistent with a consumer financial product safety 

3 rule promulgated by the Commission, and then only to the 

4 extent of the inconsistency. For purposes of this section, 

5 a State law is not inconsistent with this Act or a consumer 

6 financial product safety rule, or the purposes of the Act 

7 or rule, if the protection afforded by such State law to 

8 any consumer is greater than the protection provided by 

9 the consumer financial product safety rule or this Act. 

10 Nothing in this Act or any rule promulgated under this 

11 Act precludes any remedy under State law to or on behalf 

12 of a consumer. 

13 (b) PROGRAMS TO PROMOTE FEDERAL-STATE CO14 OPERATION.— 

15 (1) IN GENERAL.—The Commission shall estab16 lish a program to promote cooperation between the 

17 Federal Government and State governments for pur18 poses of carrying out this Act. 

19 (2) AUTHORITIES.—In implementing the pro20 gram under paragraph (1), the Commission may— 

21 (A) accept from any State or local author22 ity engaged in activities relating to consumer 

23 protection assistance in such functions as data 

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1 istration and enforcement of this Act which 

2 such States or local governments may be able 

3 and willing to provide and, if so agreed, may 

4 pay in advance or otherwise for the reasonable 

5 cost of such assistance; and 

6 (B) commission any qualified officer or 

7 employee of any State or local government 

8 agency as an officer of the Commission for the 

9 purpose of conducting investigations. 

10 (c) COOPERATION OF FEDERAL DEPARTMENTS AND

11 AGENCIES.—The Commission may obtain from any Fed12 eral department or agency such statistics, data, program 

13 reports, and other materials as it may determine necessary 

14 to carry out its functions under this Act. Each such de15 partment or agency shall cooperate with the Commission 

16 and, to the extent permitted by law, furnish such materials 

17 to the Commission. The Commission and the heads of 

18 other departments and agencies engaged in administering 

19 programs relating to consumer financial product safety 

20 shall, to the maximum extent practicable, cooperate and 

21 consult in order to ensure fully coordinated efforts. 

22 SEC. 9. PROHIBITED ACTS. 

23 It shall be unlawful for any person— 

24 (1) to advertise, offer, or attempt to enforce 

25 any agreement, term, change in term, fee, or charge 


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1 in connection with any consumer financial product, 

2 or engage in any practice, that is not in conformity 

3 with this Act or an applicable consumer financial 

4 product safety rule under this Act; or 

5 (2) to fail or refuse to permit access to or copy6 ing of records, or fail or refuse to establish or main7 tain records, or fail or refuse to make reports or 

8 provide information to the Commission, as required 

9 under this Act or any rule under this Act. 

10 SEC. 10. ENFORCEMENT. 

11 (a) CRIMINAL PENALTIES.— 

12 (1) KNOWING AND WILLFUL VIOLATIONS.—Any 

13 person who knowingly and willfully violates section 9 

14 shall be fined not more than $500,000, imprisoned 

15 not more than 1 year, or both for each such viola16 tion. 

17 (2) EXECUTIVES AND AGENTS.—Any individual 

18 director, officer, or agent of a business entity who 

19 knowingly and willfully authorizes, orders, or per20 forms any of the acts or practices constituting in 

21 whole or in part a violation of section 9 shall be sub22 ject to penalties under this section, without regard 

23 to any penalties to which that person may be other24 wise subject. 

25 (b) CIVIL PENALTIES.— 


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1 (1) IN GENERAL.—Any person who violates sec2 tion 9 shall be subject to a civil penalty in an 

3 amount established under paragraph (2). A violation 

4 of section 9 shall constitute a separate civil offense 

5 with respect to each consumer financial product 

6 transaction involved. 

7 (2) PUBLICATION OF SCHEDULE OF PEN8 ALTIES.—Not later than December 1, 2009, and De9 cember 1 of each fifth year thereafter, the Commis10 sion shall prescribe and publish in the Federal Reg11 ister a schedule of the maximum authorized civil 

12 penalty that shall apply for any violation of section 

13 9 that occurs on or after January 1 of the year im14 mediately following the date of such publication. 

15 (3) RELEVANT FACTORS IN DETERMINING

16 AMOUNT OF PENALTY.—In determining the amount 

17 of any civil penalty in an action for a violation of 

18 section 9, the Commission— 

19 (A) shall consider— 

20 (i) the nature of the consumer finan21 cial product; 

22 (ii) the severity of the unreasonable 

23 risk to the consumer; 

24 (iii) the number of products or serv25 ices sold or distributed; 


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1 (iv) the occurrence or absence of con2 sumer injury; and 

3 (v) the appropriateness of such pen4 alty in relation to the size of the business 

5 of the person charged; and 

6 (B) shall ensure that penalties in each case 

7 are sufficient to induce compliance by all regu8 lated entities. 

9 (4) COMPROMISE OF PENALTY; DEDUCTIONS

10 FROM PENALTY.— 

11 (A) IN GENERAL.—Any civil penalty under 

12 this section may be compromised by the Com13 mission. 

14 (B) CONSIDERATIONS.—In determining 

15 the amount of such penalty or whether it should 

16 be remitted or mitigated and in what amount, 

17 the Commission— 

18 (i) shall consider— 

19 (I) the nature of the consumer fi20 nancial product; 

21 (II) the severity of the unreason22 able risk to the consumer; 

23 (III) the number of offending 

24 products or services sold; 


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1 (IV) the occurrence or absence of 

2 consumer injury; and 

3 (V) the appropriateness of such 

4 penalty to the size of the business of 

5 the person charged; and 

6 (ii) shall ensure that compromise pen7 alties remain sufficient to induce compli8 ance by all regulated entities. 

9 (C) AMOUNT.—The amount of a penalty 

10 compromised under this paragraph, when fi11 nally determined, or the amount agreed on com12 promise, may be deducted from any sums owing 

13 by the United States to the person charged. 

14 (c) COLLECTION AND USE OF PENALTIES.— 

15 (1) ESTABLISHMENT OF FUND.—There is es16 tablished within the Treasury of the United States 

17 a fund, into which shall be deposited all criminal and 

18 civil penalties collected under this section. 

19 (2) USE OF FUND.—The fund established 

20 under this subsection shall be used to defray the 

21 costs of the operations of the Commission or, where 

22 appropriate, provide restitution to harmed con23 sumers. 

24 (d) PRIVATE ENFORCEMENT.— 


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1 (1) IN GENERAL.—A person may bring a civil 

2 action for a violation of section 9 for equitable relief 

3 and other charges and costs in an amount equal to 

4 the sum of— 

5 (A) any actual damages sustained by such 

6 person as a result of such violation, if actual 

7 damages resulted; 

8 (B) twice the amount of any finance 

9 charge in connection with the transaction, ex10 cept that such liability shall not be less than 

11 $1,000, such minimum to be adjusted on an an12 nual basis by the Commission based upon the 

13 consumer price index; and 

14 (C) reasonable attorney fees and costs. 

15 (e) JURISDICTION.— 

16 (1) IN GENERAL.—Any action under this Act 

17 may be brought in any appropriate United States 

18 district court, or in any other court of competent ju19 risdiction, not later than 2 years after the date of 

20 the discovery of the violation. 

21 (2) RULES OF CONSTRUCTION.—This section 

22 does not bar a person from asserting a violation of 

23 this Act in an action to collect a debt, or if fore24 closure has been initiated, as a matter of defense by 

25 recoupment or set-off. An action under this Act shall 


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1 not be the basis for removal of an action to a United 

2 States district court. Neither this section nor any 

3 other section of this Act preempts or otherwise dis4 places claims and remedies available under State 

5 law, except as otherwise specifically provided in this 

6 Act. 

7 (f) STATE ACTIONS FOR VIOLATIONS.— 

8 (1) AUTHORITY OF STATES.—In addition to 

9 such other remedies as are provided under State 

10 law, if the chief law enforcement officer of a State, 

11 or an official or agency designated by a State, has 

12 reason to believe that any person has violated or is 

13 violating section 9, the State— 

14 (A) may bring an action to enjoin such vio15 lation in any appropriate United States district 

16 court or in any other court of competent juris17 diction; 

18 (B) may bring an action on behalf of the 

19 residents of the State to recover— 

20 (i) damages for which the person is 

21 liable to such residents under subsection 

22 (d) as a result of the violation; and 

23 (ii) civil penalties, as established 

24 under subsection (b); and 


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1 (C) in the case of any successful action 

2 under subparagraph (A) or (B), shall be award3 ed the costs of the action and reasonable attor4 ney fees, as determined by the court. 

5 (2) RIGHTS OF FEDERAL REGULATORS.— 

6 (A) NOTICE OF STATE ACTION.—A State 

7 shall serve prior written notice of any action 

8 under paragraph (1) upon the Commission and 

9 provide the Commission with a copy of its com10 plaint, except in any case in which such prior 

11 notice is not feasible, in which case the State 

12 shall serve such notice immediately upon insti13 tuting such action. 

14 (B) COMMISSION AUTHORIZATION.—Upon 

15 notice of an action under subparagraph (A), the 

16 Commission shall have the right— 

17 (i) to intervene in the action; 

18 (ii) upon so intervening, to be heard 

19 on all matters arising therein; 

20 (iii) to remove the action to the appro21 priate United States district court; and 

22 (iv) to file petitions for appeal. 

23 (3) INVESTIGATORY POWERS.—For purposes of 

24 bringing any action under this subsection, nothing in 

25 this subsection or in any other provision of Federal 


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1 law shall prevent the chief law enforcement officer of 

2 a State, or an official or agency designated by a 

3 State, from exercising the powers conferred on the 

4 chief law enforcement officer or such official by the 

5 laws of such State to conduct investigations or to 

6 administer oaths or affirmations or to compel the at7 tendance of witnesses or the production of documen8 tary and other evidence. 

9 (4) LIMITATION ON STATE ACTION WHILE FED10 ERAL ACTION PENDING.—If the Commission has in11 stituted a civil action or an administrative action for 

12 a violation of section 9, a State may not, during the 

13 pendency of such action, bring an action under this 

14 section against any defendant named in the com15 plaint of the Commission for any violation of section 

16 9 that is alleged in that complaint. 

17 SEC. 11. REPORTS. 

18 (a) REPORTS TO THE PUBLIC.—The Commission 

19 shall determine what reports should be produced and dis20 tributed to the public on a recurring and ad hoc basis, 

21 and shall prepare and publish such reports on a website 

22 that provides free access to the general public. 

23 (b) REPORT TO THE PRESIDENT AND CONGRESS.— 

24 (1) IN GENERAL.—The Commission shall pre25 pare and submit to the President and the approVerDate Nov 24 2008 02:52 Mar 26, 2009 Jkt 079200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H1705.IH H1705

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1 priate committees of Congress, at the beginning of 

2 each regular session of Congress, a comprehensive 

3 report on the administration of this Act for the pre4 ceding fiscal year. 

5 (2) REPORT CONTENT.—The reports required 

6 by this subsection shall include— 

7 (A) a thorough appraisal, including statis8 tical analyses, estimates, and long-term projec9 tions, of the incidence and effects of practices 

10 associated with the provision of consumer finan11 cial products that are inconsistent with the ob12 jectives specified in section 5(a), with a break13 down, insofar as practicable, among the various 

14 sources of injury, as the Commission finds ap15 propriate; 

16 (B) a list of consumer financial product 

17 safety rules prescribed or in effect during such 

18 year; 

19 (C) an evaluation of the degree of observ20 ance of consumer financial product safety rules, 

21 including a list of enforcement actions, court 

22 decisions, and compromises of civil penalties, by 

23 location and company name; 


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1 (D) a summary of outstanding problems 

2 confronting the administration of this Act in 

3 order of priority; 

4 (E) an analysis and evaluation of public 

5 and private consumer financial product safety 

6 research activities; 

7 (F) a list, with a brief statement of the 

8 issues, of completed or pending judicial actions 

9 under this Act; 

10 (G) the extent to which technical informa11 tion was disseminated to the research and con12 sumer communities and consumer information 

13 was made available to the public; 

14 (H) the extent of cooperation between 

15 Commission officials, representatives of the con16 sumer financial products industry, and other in17 terested parties in the implementation of this 

18 Act, including a log or summary of meetings 

19 held between Commission officials and rep20 resentatives of industry and other interested 

21 parties; 

22 (I) an appraisal of significant actions of 

23 State and local governments relating to the re24 sponsibilities of the Commission; 


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1 (J) such recommendations for additional 

2 legislation as the Commission deems necessary 

3 to carry out the purposes of this Act; and 

4 (K) the extent of cooperation with, and the 

5 joint efforts undertaken by, the Commission in 

6 conjunction with other regulators with whom 

7 the Commission shares responsibilities for con8 sumer financial product safety. 

9 SEC. 12. AUTHORIZATION OF APPROPRIATIONS. 

10 There are authorized to be appropriated to the Com11 mission for purposes of carrying out this Act such sums 

12 as may be necessary. 

Æ 


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