Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled a 1,336-page financial reform bill today, as consumer advocates warned that it doesn’t offer enough to protect the public and concentrates too much power in the Federal Reserve, and bankers complained the bill would “confuse consumers and businesses.” No wonder Dodd’s quitting his job.
Introducing the Bill, Dodd said:
“The stakes are far too high, and the American people have suffered far too greatly, for us to fail in this effort. This legislation will not stop the next crisis from coming. No legislation can, of course. But by creating a 21st-century regulatory structure for our 21st-century economy, we can equip coming generations with the tools to deal with that crisis and to avoid the kind of suffering we have seen in this country.”
The Bill would create a new body, the Consumer Financial Protection Bureau, “with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.” While the House version of the financial reform bill envisioned an independent Consumer Financial Protection Agency, the Senate’s Bureau would be part of the Federal Reserve. That rankled some advocates who have been pushing for a broader, more independent agency, such as Gail Hillebrand of Consumers Union:
It is encouraging that Senator Dodd’s financial reform package includes a new government watchdog to protect consumers from unfair financial practices that can undermine family wallets and our economy. But we are concerned that this bill gives veto power over new consumer protections to another group of banking regulators and relies too heavily on these same regulators to enforce new safeguards. We need a government watchdog with real authority to protect consumers.
Other advocates expressed similar concerns:
It’s terribly disappointing,” said John Taylor, president of the National Community Reinvestment Coalition, in an interview with HuffPost. “It’s a marked retreat from the original bill he proposed. You can keep using the word ‘independent’ all you like, but if the agency’s independence is dependent on approval from the agencies to make its rules — that doesn’t make it independent.”
Meanwhile, major banks are lashing out at the bill, with Richard Hunt, president of the Consumer Bankers Association, saying that it “would disrupt the uniform and efficient operation of the banking system, increase the cost of compliance, and potentially confuse consumers and businesses with a hodgepodge of rules and regulations.” That clears things up a lot; it’s a relief to know we’ve got a uniform, efficient, non-confusing financial system in place.
Summary: Restoring American Financial Stability (PDF) [Senate Committee on Banking, Housing, and Urban Affairs]
Senator Dodd Proposes Financial Regulatory Reforms [Consumers Union]
Dodd Unveils Financial Regulatory Reform Bill With ‘Consumer Financial Protection Bureau’ [HuffPo]