Consumer Financial Protection: Thinking Outside the Boxes
James Gattuso /
Is a congressional compromise on financial services regulation in the works? Steven Pearlstein of the Washington Post today reports the answer is “yes,” citing progress in negotiations between Democratic Sen. Chris Dodd of Connecticut and GOP Sen. Bob Corker of Tennessee. Specifically, Pearlstein points to a breakthrough on one of the major sticking points of the debate: whether to create a new agency to enforce consumer protection laws in financial service markets.
As described, the compromise proposal may alleviate many of the potential organizational objections to the idea. Nevertheless, the new regulator could hurt — rather than help — consumers.
The creation of an independent super-agency dedicated soley to consumer regulation has been a centerpiece of President Obama’s financial regulation agenda. But, while it was approved last summer by the House, the idea has languished in the Senate, as opponents have pointed out that a consumer regulation agency independent of other banking regulators would foster confusion and bureaucratic infighting, and actually undermine efforts to assure the safety and soundness of banks.
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