Reporting the CFPA Legislation

The New York Times leads its coverage of the financial-reform legislation with the news that the House Financial Services Committee gutted the Consumer Financial Protection Act by exempting all non-ginormous banks from the agency’s oversight.

Reporter Stephen Labaton emphasizes the right stuff here, pointing out in his lede that the move exempts “more than 98 percent of the nation’s banks from oversight by a new agency created to protect consumers from abusive or deceptive credit cards, mortgages and other loans.”

The Times’s story is much better on the issue than either the Washington Post’s or The Wall Street Journal’s. The Post doesn’t bother with the CFPA sellout until the ninth paragraph (instead focusing on the also-important derivatives bill passed) and then, unlike the Times, doesn’t give readers the critical context about why the move is so important. Here’s what it says:

The committee decided Thursday to limit the powers of the new agency over small banks with assets less than $10 billion and credit unions with less than $1.5 billion. The agency will write consumer protection rules for all financial firms, but small banks will remain under the exclusive supervision of existing banking regulators.

That doesn’t cut it. The Post calls them “small banks,” which would lead its readers to reasonably infer that the exclusion only applies to a minority of institutions.

The Journal misses this, too, saying “Democrats agreed to exempt almost all community banks with less than $10 billion in assets from being examined by a new federal agency enforcing consumer protection laws.”

Compare these to the Times’s context, in the first sentence of its story, where it tell readers that “98 percent of the nation’s banks” are exempted by the move—clearly telling readers why it really matters. Now that doesn’t mean 98 percent of American depositors won’t be covered by the CFPA. That’s because too-big-to-fail banks like Citigroup, JPMorgan Chase, and Bank of America have far more customers than banks in that bottom 98 percent. As the Times points out, the banks under CFPA regulation have 80 percent of the country’s bank assets.

Still, though the consumer agency wouldn’t be empowered to regularly exam 98 percent of banks, it would be able to investigate consumer complaints at them, something only the Times points out.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.