Banking panel's top Republican proposes consumer financial protection agency
Wednesday, April 7, 2010
Staff members for Sen. Richard C. Shelby (Ala.), the ranking Republican on the Senate banking committee, sent a proposal to their Democratic counterparts last week that would create an independent consumer financial protection agency, according to sources familiar with the negotiations.
The offer marks a significant reversal from the position that Shelby and other Republicans have long held: that such an agency would clash with a separate set of regulators charged with overseeing the health of financial firms. The proposal includes limits on the consumer agency's authority, including a commission of regulators that could serve as a check on rules put forth by the agency, according to one source. The sources spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.
It is unclear what other concessions Shelby might be seeking in return for his support of a new consumer agency, and aides to Shelby and committee Chairman Christopher J. Dodd (D-Conn.) declined to speak in detail about the ongoing discussions.
"We continue to discuss different approaches" on consumer protection, said Shelby spokesman Jonathan Graffeo. "As Senator Shelby has said, his primary concern is not the agency's form or location, but a meaningful role for safety and soundness regulators."
Shelby's proposal marks the latest in a months-long series of negotiations between lawmakers trying to arrive at a bipartisan deal. Dodd and Shelby have twice broken off talks after reaching impasses. Dodd eventually sought out another Republican partner, freshman Sen. Bob Corker (Tenn.). They hammered out some compromises, but Dodd decided to forge ahead alone before they reached a final deal.
Dodd's committee passed his 1,336-page draft bill on a party-line vote last month. The House passed its financial regulatory overhaul bill in December.
The consumer protection agency, while the most high-profile element of the debate, is only one part of Dodd's wide-ranging legislation. Differences remain on a variety of other core issues, such as how best to oversee the vast derivatives market, what kind of supervisory duties the Federal Reserve should retain and how to ensure that taxpayers aren't on the hook if financial firms fail in the future.
Dodd's bill is set to go to the Senate floor this month after lawmakers return from a two-week recess. Both Dodd and Obama administration officials have said that they hope to win congressional approval for the legislation before the midterm elections this fall.