Dodd Leaves GOP Behind For Financial Regulations
AUDIE CORNISH, host:
This is WEEKEND EDITION from NPR News. I'm Audie Cornish. Liane Hansen is away.
After months of working with Republicans to fashion a joint overhaul of financial regulation, Senator Christopher Dodd will go it alone tomorrow. The banking committee chairman will unveil his proposal to rewrite regulations with the aim of avoiding another financial meltdown.
NPR's John Ydstie joins us to talk about what we should expect. Hi, John.
JOHN YDSTIE: Hi, Audie.
CORNISH: So, Senator Dodd has decided to go forward without Republican support. Why?
YDSTIE: Well, Senator Dodd said he's being nudged by the 101st senator, which is the Senate calendar. This is an election year, so there's limited time for serious deal making. There's a big health care bill that will absorb lots of that time and Dodd is retiring at the end of this session. So, he's decided to force the issue.
CORNISH: Is Senator Dodd going to put something on the table that is going to reflect the negotiations he's been having with Republicans or is everyone just going to revert to their original defensive positions?
YDSTIE: Well, Senator Dodd says he will incorporate ideas offered by Republicans, including those of Tennessee Senator Bob Corker, his most recent negotiating partner. One area of particular disagreement with Republicans has been Dodd's original proposal for a stand-alone, independent Consumer Financial Protection Agency.
Dodd signaled in negotiations he's willing to make some compromises on that. Republicans who initially said the agency was a non-starter have also said they're ready to make some concessions.
CORNISH: So, what exactly did this agency idea look like when negotiations stopped?
YDSTIE: Dodd had agreed to drop the stand-alone nature of the agency and have it housed at the Federal Reserve. And the Republicans had agreed to significant levels of independence. For instance, the director of the agency would be appointed by the president, confirmed by the Senate and not report directly to the chairman of the Federal Reserve. The agency would have authority to make rules governing consumer banking products like credit cards and mortgages, and products from non-bank financial companies like the payday lenders and auto dealerships.
But here was the sticking point: Republicans insisted that the consumer agency should not be able to enforce the rules it made.
CORNISH: Okay. So, what's the argument behind that? Because it would seem that if you can write the rules and make the rules you should be able to actually enforce those rules.
YDSTIE: Well, the Republicans and the financial industry argue that bank regulators who are responsible for the safety and soundness of banks should be the ones enforcing the rules, just to make sure that the consumer protections don't destabilize the banks.
Democrats and consumer advocates say that sounds a lot like what we had before the crisis when bank regulators failed to protect consumers.
CORNISH: So, will Senator Dodd budge on this enforcement issue?
YDSTIE: Well, I think if he thought he could get an agreement on the whole package of reforms by making some accommodation here, it's conceivable. Whether he could bring other Democrats along is a question, and there's still a lot to be done before the Senate passes the bill. And then, of course, it has to reconcile its differences with the House, which has already passed its bill. So, there's still a long ways to go.
CORNISH: NPR's John Ydstie. Thanks, John.
YDSTIE: You're welcome.
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