Senate Rejects GOP Consumer Protection Plan
RENEE MONTAGNE, host:
Regulating Wall Street is the main focus of discussion in Washington, D.C. now. The Senate is working on a bill that would rewrite the rules for the financial industry.
One of the most contentious proposals would create a consumer financial protection agency. Democrats tend to support it. Republicans dont. Yesterday, Republicans made their first attempt to knock down that provision.
NPR's Audie Cornish reports.
AUDIE CORNISH: The loudest arguments over the proposed consumer agency often center on what kind of business it would cover. Republican Minority Leader Senator Mitch McConnell...
Senator MITCH MCCONNELL (Representative, Kentucky; Senate Minority Leader): From florists to orthodontists to builders to car dealers - all concerned about the potential impact this new agency would have.�
Senator CHRIS DODD (Democrat, Connecticut; Senate Banking Committee Chairman): The idea, to use his language, that we're covering florists and accountants and lawyers and dentists - nothing could be further from the truth.
CORNISH: That's head of the Banking Committee, Democrat Chris Dodd. Dodd says only companies with significant financial business would be covered. But critics take issue with that definition.
Sen. DODD: That's not a bad point. I understand that. But dont tell me it covers a florist. Under any, any definition of the word, significantly involved in financial services and products, excludes retailers and merchants across the country.
CORNISH: Dodd says legislators are constantly playing catch-up with the financial industry and a consumer bureau could help end that. Right now, the legislation takes the responsibilities of consumer regulations currently split between half a dozen agencies, and puts them all in the hands of a special bureau at the Federal Reserve. The bureau would read the fine print on all kinds of loans and banking industry products -credit cards, mortgages, payday lending and more - and it would issue and enforce rules on the products for the largest financial institutions.
But the real debate will be over the consumer division's power, says Michael Calhoun of the Center for Responsible Lending.
Mr. MICHAEL CALHOUN (President, Center for Responsible Lending): They're trying to attack the Consumer Protection Agency by giving existing bank regulators veto power over it, by limiting its enforcement authority, by limiting its rule-making authority.
CORNISH: For instance, the Republican alternative plan would've placed the agency in the FDIC and let the banking regulators sign off on consumer rules. The amendment failed, but Republican Richard Shelby was forecasting the GOPs next move way before the vote.
Senator RICHARD SHELBY (Republican, Alabama): If our proposal's not around, we're going to be trying to surgically strike a lot of stuff -obnoxious stuff - out of this bill.
CORNISH: One strike target is a provision allowing states to pass tougher consumer laws than the new federal agency. Unlike current law, the bill would also let state attorneys general go after national banks on consumer issues.
And it's not just Republicans who have raised concerns about it. Here's Delaware Democrat Tom Carper.
Senator TOM CARPER (Democrat, Delaware): The problem I have with having 50 attorney generals step in and try to enforce the rules and regulations from this new bureau and in 50 different states, each with their our perspective, I think it invites, almost a patchwork quilt.
CORNISH: Senator Carper says he'll file an amendment to change that part of the bill if someone doesnt beat him to it.
Audie Cornish, NPR News the Capitol.
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