Should the CFPA be created?
October 30, 2009 | federal legislation, industry | Comments (0)Senate leaders are haggling. From Politico:
The fate of financial reform has always hinged on whether Senate Banking Committee Chairman Chris Dodd and Republican Richard Shelby could cut a deal.
But now the two can’t agree on whether a consumer financial protection agency — a linchpin of reform — should be created at all. They can’t even agree on how to define “systemic risk authority,” much less figure out how to regulate it. And Republicans are starting to express frustration that Dodd, who faces a tough reelection next year, wants to rush a bill through committee next month.
Shelby signaled trouble earlier this week when he rejected creation of the CFPA, one of President Barack Obama’s top priorities in financial reform.
“A free-standing consumer products [agency] outside the prudential regulator — the regulator that deals with safety and soundness — I think is folly and dangerous,” Shelby told POLITICO, saying he would not support legislation creating such an agency.
But the tensions go deeper than a disagreement over creation of a new agency.
Shelby also isn’t ready to make any agreement on the monitoring of financial institutions that could cause widespread economic meltdown because Democrats and Republicans haven’t been able to define the authority of such a systemic risk regulator, two top Republican aides said.
“He believes that tasking a regulator with undefined responsibility creates more, not less, risk,” one aide said.
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