ON Monday, Senator Christopher Dodd unveiled his proposal to reform the nation’s financial regulatory system, including a new agency to protect consumers from predatory practices like teaser mortgages and misleading credit card contracts.
It’s a great idea, save for a fatal flaw. As a sop to Republicans, Senator Dodd’s plan lodges the agency in the very organization that dropped the ball in America’s consumer finance crisis: the Federal Reserve.
The Fed has a long and largely undistinguished history of consumer protection. During the 1970s, officials at the Fed opposed the Community Reinvestment Act, which attacked home lending discrimination, and the Home Mortgage Disclosure Act, which compelled banks to reveal their lending patterns.
When these became law, the Fed limply enforced them; it gave the same treatment to the Home Ownership Equity Protection Act, passed in 1994.
The Fed also sat on the sidelines during the housing bubble. Many Fed officials supported the explosion in subprime lending, and they seemed to look the other way as foreclosures soared in the latter half of 2006. ...
Comment: Maybe if the Senate stopped trying to keep their hands in every single facet of our lives they could do the job the founders intended, namely looking out for the welfare of their states. Then there would be no need for all these unelected bodies that have regulation authority, who are chartered to look out for some facet of life for the citizenry. We really need to stop making more government.