The “endgame”
June 1, 2010 | federal legislation, industry | Comments (0)As described by the activists:
Sen. Dodd’s bill creates a Bureau of Consumer Financial Protection housed within the Federal Reserve. The bureau would have a presidentially appointed director, an independent budget (which will equal no more than 10 percent of the Fed’s operating budget), and the ability to take enforcement action against banks with more than $10 billion in assets. The bureau has rule-writing authority, but its rules could be vetoed by a two-thirds vote of the proposed Financial Stability Oversight Council, which will be composed of the heads of the bank regulatory agencies, the secretary of the Treasury, and the chairman of the Federal Reserve.
The House bill creates a fully independent Consumer Financial Protection Agency, with a presidentially appointed director and an independent budget. It has full rule-writing authority (with some exemptions, see below) and the ability to enforce its rules for banks with more than $10 billion in assets.
While full and complete independence for the new consumer protection regulator is preferable, both bills match the four criteria that Elizabeth Warren, chairperson of the congressional oversight panel reviewing the government’s rescue of financial firms, has said are critical to the regulator’s success:
- An independent director
- Independent source of funding
- Rule-making authority
- Enforcement powers
The conferees should fight any attempt to add carve-outs or exemptions for special interest groups or niche financial products (like payday loans).
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