Dodd Weighs Dropping Idea of Creating Independent Body in Bid to Get Financial Regulatory Revamp Passed This Year
Senate Banking Committee Chairman Christopher Dodd is considering scrapping the idea of creating a Consumer Financial Protection Agency, people familiar with the matter said, an initiative at the heart of the White House's proposal to revamp financial-sector regulations.
The Connecticut Democrat, who announced this month that he wouldn't run for re-election this year, has discussed the possibility of abandoning the push for a new agency during negotiations with key Senate Republicans as a way to secure a bipartisan deal on the legislation, these people said.
Mr. Dodd's offer is conditional, however: Republicans must agree to create a beefed-up consumer-protection division within another federal agency, these people said.
The apparent willingness to forgo an independent consumer-protection agency would be a major concession for Mr. Dodd, who had blasted the banking industry for lobbying aggressively to prevent the creation of such an entity. "The very people who created the damn mess are the ones now arguing that consumers ought not to be protected," he said in June.
Mr. Dodd's shift comes amid a new sense of urgency to enact revamped rules governing the financial sector in what is now a narrow window before the November election.Bipartisan support is believed necessary to pass such legislation, as Democrats aren't likely to get the 60 Senate votes needed to overcome a potential Republican filibuster. With Mr. Dodd no longer seeking re-election, some of the pressure to apply a populist stamp on new financial regulations has eased. ...
Dropping the bid for a standalone consumer-protection agency would strip out a central plank of the White House's proposal and could infuriate liberals and consumer groups who have championed the idea. It could also breathe life into an effort to get a compromise on new financial regulations, assuming liberal Democrats don't break ranks.
White House and Treasury Department officials have so far remained committed to creating a standalone agency. "There needs to be a new agency with new powers for whom this will be a primary mission," said White House National Economic Council Director Lawrence Summers.
Alternatives to the agency include a new division within the Treasury that would draft consumer rules, and a consumer-protection division run by a new federal bank regulator. The head of this division could be appointed by the White House, giving it more autonomy, people familiar with the matter said.
The CFPA was a main component of new financial regulations the Obama administration proposed in June, aiming to rewrite policies that administration officials argued had fueled the financial crisis by failing to protect consumers. The CFPA became a symbol of the legislation, and many Democrats saw it as a way to sell the financial regulatory overhaul to voters.
The CFPA proposal drew praise from Democrats, trade unions and consumer groups, but unleashed just as much opposition from many Republicans, business groups and banks.
Comment: Commonsense (at least I hope I am using commonsense) tells me that government collusion with the banking industry produced this emerging Bankgate intrigue, so if we create more government with the intended purpose to look out for and protect the little old "consumer," you and me, another Bankgate isn't going to happen? Not likely!