The Consumer Financial Protection Agency is part of President Obama’s plan to overhaul lending and credit practices and will write many new rules aimed at protecting consumers in the areas of loans and credit.

The House Financial Services Committee approved the agency in a 39 to 29 vote.

“This bill has now passed a major hurdle, and this step sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change,” said President Obama.

The major hurdle or rather hurdles included many Republicans and lobbyist for banks and businesses that argued that in the end the new agency rules would hurt consumers as lenders would be able to offer fewer products or have to charge more for the products they offer.

The FDIC and the Federal Reserve weighed in with their concerns as well of having conflicting reviews of banks, one that reviews the banks compliance with consumer protection and another that reviews a banks financial condition. Some argued that complying under new rules might conflict with sound practices.

Small banks and credit unions also had their voices heard and were successful in winning an exemption card when it comes to the newly proposed CFPA rules.

President Obama has said of the agency, “The Consumer Financial Protection Agency will prevent predatory lending practices and other abuses and will ensure that consumers get clear information they can understand about financial products like credit cards and mortgages.”

The bill was approved Thursday but it had several amputations in to ensure survival.

President Obama’s administration wanted a mandate that banks offer what has been referred to as “plain vanilla” products, such as a 30 year fixed mortgage.

A line referring to reasonable steps to ensure that customers understand what they are buying was cut. Democrats argued that this was simply too difficult to enforce.

What was included in the CFPA bill?

-The Consumer Protection Agency would oversee common financial products like mortgages, credit cards, payday loans and savings account terms.

-The agency would be able to ban products and practices determined to be “unfair, deceptive or abusive.”

- The agency would also be in charge of implementing a law passed earlier this year by Congress that protects consumers from sudden interest rate increases on unpaid credit card balances.

- Only banks with more than $10 billion in assets would fall under the management of the Consumer Protection Agency. Most banks and credit unions would remain under the monitor of regulators.

-Retailers are exempt but the financial institutions that offer a store-brand credit card or the institution that provides financing for those such as auto dealers would still be subject to new agency rules.

-New powers will be granted to state attorneys general to write tougher rules within their state and offer increased enforcement.

So what do you think? Will the Consumer Financial Protection Agency be a trick or treat?

Jonathan Kraft is a recognized expert in helping people to understand Identity Theft prevention and protection. Learn more about the secrets used by identity thieves at the Identity Theft Secrets blog.