Senator Dodd's Regulation Proposal

Last week Connecticut Senator Christopher J. Dodd (Dem.) proposed a new plan for rectifying financial regulation. The proposal calls for the creation of a Bureau of Financial Protection which would modify the Consumer Financial Protection Agency supported by the House last December. If accepted the bureau will be responsible for regulating and preventing mortgage, credit union and payday loan deception amongst other financial issues which violate consumer safety. Senator Dodd recommends the following be implemented:

• the creation of the bureau within the national Treasury Department


• an independent director whom the president appoints


• a budget derived from fees obtained from large banks and other lenders


• obligatory discourse between existing bank and credit union regulators to ensure new rules are agreeable to all parties involved

The proposal is contested by big bank lobbyists and consumer advocates regardless of political alliance. Those in favor of big banks argue that the proposal will allow for an unnecessary increase in government control of financial industries and will impose upon existing regulators whom already ensure consumer safety. On the other hand, consumer advocates oppose the plan because it will only allow for regulation of banks and credit unions which maintain gross assets rather than all financial institutions. Additionally, requiring discussion with existing regulators, those deemed responsible by some for the financial crisis, limits the independence of the bureau to create new rules beneficial to the public.

Proposals introducing new policies which affect financial regulation will continue to elicit controversy. Government officials must consider the interests of lobbyists but ought not place them above the needs and protection of the consumers. It is time for the government to settle upon a financial regulation reform plan which benefits the American public not private interests.

For further information please see the attached New York Times article:

http://www.nytimes.com/2010/03/01/business/economy/01regulate.html?pagewanted=1