Dodd: Watchdog must make rules, enforce them
WASHINGTON (Reuters) - Senator Christopher Dodd, chief negotiator for the Democrats in talks on a bipartisan financial reform bill in the Senate, on Thursday called for creating a new government "office" with the power to craft and enforce rules to protect financial consumers.
In a statement that conspicuously omitted any call for an independent agency on consumer protection, Dodd said:
"A lot of attention is being paid to what address the new consumer watchdog will have, but the critical question is 'Will this office have the authority and independence it needs?'"
President Barack Obama's proposal last year to create an independent Consumer Financial Protection Agency (CFPA) has been the main impediment for weeks to a Senate compromise on financial regulation reform legislation.
Republicans oppose making the watchdog an independent agency, but have said they could live with it as a unit of a banking regulatory agency. Dodd has been discussing putting it in the Federal Reserve as a possible compromise.
But some Republicans also want the agency in which the watchdog is housed to have veto power over any rules it writes -- a position that Democrats have been unwilling to accept.
"I am pushing for an office with an independent head, appointed by the president and confirmed by the Senate; that has an independent budget to do its work; autonomy to craft rules, and an ability to enforce those rules," Dodd said.
Sources told Reuters on Wednesday that Senator Richard Shelby, the banking committee's top Republican, was open to possibly putting the CFPA inside the Fed.
Wherever the watchdog ends up, it would be designed to regulate mortgages, credit cards and other consumer financial products, and to consolidate consumer protection duties that are now scattered across several agencies, including the Fed.
"In the past, consumer protections were under the control of the Federal Reserve System and other regulators," Dodd said.
"So while we haven't settled on the Fed as the place for this to be housed, there's a vast difference between what is being suggested today and the status quo that failed so miserably in the past."
(Reporting by Kevin Drawbaugh; Editing by Jan Paschal)
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