NPR logo GOP Nixes Independent Financial Agency As WH Reassures Consumers

GOP Nixes Independent Financial Agency As WH Reassures Consumers

Just weeks after lawmakers raked Federal Reserve Secretary Ben Bernanke over the coals for falling down on the job when it comes to protecting consumers (among other things,) it appears the Senate Banking Committee is considering putting consumer protection in the Fed's hands.

New proposals floated during committee negotiations over financial-reform regulations would have a consumer-focused agency in the Federal Reserve.

The FDIC and the Treasury Department are also in the running to house the consumer office.

Republicans met and discussed the proposals Tuesday evening, agreeing to hang together against any effort to create a stand-alone agency.

According to sources close to the negotiations GOP lawmakers want the consumer body to have to report to the head of whatever agency its housed in.

This falls short of the original White House proposal that would establish a separate and standalone agency to write and enforce rules for consumer products such as home loans and credit cards.

Predatory home loans in particular have been cited as one of many factors in the recent financial crisis.

In the last week White House officials and Senator Chris Dodd have signaled that they are more concerned with such an agency's powers rather than its address.

Still Treasury Secretary Timothy Geithner and White House Senior Valerie Jarrett had to assure more than three dozen consumer advocacy groups in a meeting Wednesday that the Obama administration is committed to the idea.

Geithner and Jarrett reportedly laid out their requirements for a bill. Those include an independent leader appointed by the president and confirmed by the Senate with a budget and separate offices.

The White House also wants the agency to have the power to set and enforce regulations and carry out decisions.

(Earlier, we wrote of how the proposed agency has evolved is seen as a major win for banking lobbyists and a defeat for consumer activists.)

(Audie covers Capitol Hill for NPR.)