The bill to create the Consumer Financial Protection Agency (CFPA)--one of the administration's key initiatives for reforming the financial system--has passed the House Financial Services and Energy and Commerce Committees, but its future is far from certain. Respective committee chairmen Barney Frank (D-Mass.) and Henry Waxman (D-Calif.) sharply disagree about the structure of the agency, with Representative Frank favoring oversight by a single director and Representative Waxman arguing for a presidentially appointed, five-member commission. Financial industry groups like the U.S. Chamber of Commerce cite ongoing concerns about the cost and complexity of the CFPA in their opposition to the bill. Some consumer groups question the potential ability of the agency to protect consumers, given elimination of the "plain vanilla" product requirement and the exemptions that have been granted to special industries like auto dealers, retailers, and small community banks. Both banks and consumer advocates are disappointed by the preemption amendment, which allows federal regulators to exempt national banks from state consumer protection laws on a case-by-case basis. Representative Emanuel Cleaver (D-Mo.) perhaps summed up the situation best: "In the end, we have weakened legislation that the opposition is not going to support."

Given the current debate, what is the prognosis for the CFPA bill in the House and the Senate? Can the legislation pass Congress in its current form, and if so, is it likely to be effective in protecting consumers without causing damage to the financial services industry?