No to Consumer Protection Agency
Posted on Feb 28, 2010
Plans to create an independent agency to offer consumer financial protection have probably been scrapped. According to a leaked document, Democratic Sen. Chris Dodd is proposing that the protection office be within the Treasury Department instead of being independent, a clear capitulation to the Republicans. —JCL
Mother Jones has obtained a copy of Sen. Chris Dodd’s plan to house a consumer financial protection office within the Department of the Treasury rather than creating an independent agency. Several other news sources have received copies, but none have made the leaked document publicly available. We’re posting Chris Dodd’s consumer financial protection plan here (PDF). It seems certain to disappoint experts and progressives who had called for a powerful new agency. (Andy Kroll has more on this.) This is the document’s top-line summary:
Create a [Bureau of Financial Protection] inside of Treasury with a Presidentially-appointed director; a dedicated budget (through assessments on large banks, non-banks, and with the Fed making up the shortfall); autonomous rule-writing authority with the regulations to apply across-the-board to all entities offering financial services or products; and examination and enforcement authority for large banks and mortgage companies, small banks in a back-up capacity, and other non-banks on a risk basis, as described below.
The independent agency proposal would be dropped.
As Andy explained Saturday afternoon, Dodd’s decision to move financial protection inside an existing agency is an effort to gain Republican votes for financial reform. But it’s unclear whether either of the Republicans Dodd has negotiated with to date—Sen. Richard Shelby (R-Al.) and Sen. Bob Corker (R-Tenn.)—will support the new plan. There hasn’t been any hint of GOP backing for the proposal in newspaper articles on Dodd’s leaked plan.
Chris Dodd is the prime mover behind a proposal for a consumer financial protection office. A failure to establish the agency would come near the end of the long Senate career of the Connecticut Democrat, who is not seeking re-election.