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Weekly UpdatesOn July 14, Senate Banking Committee Chairman Chris Dodd (D-Connecticut) convened a hearing to discuss the proposal to create an independent Consumer Financial Protection Agency. In his opening remarks, Chairman Dodd said that since the very first hearing in his committee on modernizing the nation's financial regulatory system, he has indicated that consumer protection should be the "top priority in our deliberations."
Dodd clearly pointed some fingers at existing financial regulators for the mortgage market damage that has occurred. He said, "For 14 years, despite a clear directive from Congress, the Federal Reserve Board took no action to ban abusive home mortgages. Gaping holes in the regulatory fabric allowed mortgage brokers and bankers to make and sell predatory loans to Wall Street that turned into toxic securities and brought our economy to its knees."
Dodd complimented the Obama administration's proposal for a new Consumer Financial Protection Agency, saying, "The administration has sent us a bold and, I believe, thoughtful plan for that agency."
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Anticipating the likely criticism of the proposal, Dodd said, "No senator on this committee, Democrat or Republican, wants to stifle product innovation, limit consumer choice or create regulation that is unnecessary or unduly burdensome."
Dodd said he welcomed "constructive input from those in the financial services sector who share our commitment, by the way, to making sure that American families get a fair shake."
On June 11, Dodd outlined the broad elements of a regulatory reform plan he favored that would include an independent consumer-protection agency to regulate credit and bank products and protect consumers from predatory practices. Dodd's proposal would favor giving the agency: 1) broad regulatory and enforcement authority over credit and bank products; 2) make it be responsible for protecting consumers from predatory practices of payday lenders, mortgage brokers, banks and other financial institutions; and 3) give it a seat next to the safety-and-soundness regulators as part of a systemic risk council.
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