The Administration wants an independent Consumer Financial Protection Agency with its own budget and authority to act. The Republicans want a six-person council with no independence and little authority. Three of the council's seats would be held by the government -- the chairs of the Federal Reserve and the Federal Deposit Insurance Corporation, plus the Comptroller of the Currency. Historically, none of these regulators has flexed its muscles on behalf of consumer care.
Consumer "experts" would hold the other three seats. There's no word on who would appoint them or whether they'd actually see things through consumers' eyes.
Even if they were zealots, they couldn't accomplish much. Under its mild words, the bill is a classic "no." No issuing rules to stop unfair, deceptive, or abusive practices. No jurisdiction over payday lenders, auto dealers, and check-cashing services. No rule-making authority over non-bank mortgage originators of the sort that helped drive predatory mortgage lending. No chance for state attorneys general to charge national banks with violations of state laws.
The council could add new regulations to existing laws, but not if they'd affect the safety and soundness of banking institutions. Before you say "that makes sense," consider this: Last year, the Comptroller of the Currency, John Dugan, opposed the new reg that stops credit-card issuers from raising interest rates on borrowers retroactively. Dugan said it would undermine the safety of banks. That's code for, "we don't want any consumer protection that would cost the banks a significant amount of money," says Travis Plunkett, legislative director for the Consumer Federation of America.
From the banks' point of view, of course, anything that prevents them from charging abusive rates and fees costs them significant money.
The original CFPA was designed to sweep up the government's, seven, scattered, ineffective consumer protection bureaus and streamline them into a single agency-one with clout. The Republicans don't want clout. They'd float their new council on top of all those bureaus, making the gridlock worse.
Each of these restrictions would probably lose on an up-and-down Senate vote. But if something like them isn't in the final bill, the Republicans could doom it in a filibuster. So Democratic Senator Chris Dodd, who's shepherding the bill, still has to negotiate. The question now is how far he will go. A new and useless consumer council would be worse than none at all.
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