House Panel Backs New Consumer Agency, Defeats Amendment on For-Profit Colleges

October 23, 2009

A House of Representatives committee on Thursday approved legislation that would create a new Consumer Financial Protection Agency designed to increase federal oversight of several forms of consumer credit, including private student loans. The measure, approved by the House Financial Services Committee along largely party lines and backed by the Obama administration, is heartily endorsed by consumer and student groups. But they were disappointed by the House panel's rejection Thursday of an amendment that would have made clear that the new agency had authority to regulate loans provided directly to students by for-profit colleges and universities. Advocates for the colleges had argued that the amendment -- proposed by Rep. Maxine Waters, a California Democrat and longtime critic of the institutions -- was unnecessary because such loans, designed to cover the gap between students' federal aid and the price of attendance, are already covered under existing federal laws.

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