Senate Rejects GOP Consumer Protection Plan The dispute over the creation of a consumer financial protection agency has been at the center of the debate of a measure trying to overhaul regulations on banks. A Republican proposal to dilute consumer provisions was defeated Thursday. Democrats and the president argued that the GOP proposal would have "gutted" consumer protections.
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Senate Rejects GOP Consumer Protection Plan

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Senate Rejects GOP Consumer Protection Plan

Senate Rejects GOP Consumer Protection Plan

Senate Rejects GOP Consumer Protection Plan

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The dispute over the creation of a consumer financial protection agency has been at the center of the debate of a measure trying to overhaul regulations on banks. A Republican proposal to dilute consumer provisions was defeated Thursday. Democrats and the president argued that the GOP proposal would have "gutted" consumer protections.

RENEE MONTAGNE, Host:

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...

MITCH MCCONNELL: From florists to orthodontists to builders to car dealers - all concerned about the potential impact this new agency would have.

CHRIS DODD: 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.

DODD: That's not a bad point. I understand that. But don't 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: But the real debate will be over the consumer division's power, says Michael Calhoun of the Center for Responsible Lending.

MICHAEL CALHOUN: 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.

RICHARD SHELBY: 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: And it's not just Republicans who have raised concerns about it. Here's Delaware Democrat Tom Carper.

TOM CARPER: 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: Audie Cornish, NPR News the Capitol.

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