House Democrats agree to put consumer watchdog agency in Federal Reserve

June 22, 2010 by · Leave a Comment
Filed under: Policy News 

Financial reform is getting more watered down by the day.  Derivatives reform has so many exclusions that is basically doesn’t fix anything.  Now this is another sign that we are not going to get real financial reform.   Putting a consumer protection agency in the Federal Reserve that has a mandate to promote a positive business environment and full employment means that protecting consumers will take backseat.

Fed had the ability to regulate the banks before and they did nothing to stop the predatory practices that were in place before the crisis ie:  subprime loans, credit card and debit cards fees.  What makes us think they will properly regulate these issues now when they already have a conflicting dual mandate?  If we really want to protect consumers, we need a independent non-partisan agency with regulatory authority to handle these issues with that being their sole mandate.  We can not think that the Fed is going to put consumers first over having healthy and profitable banks.  Currently they are still paying interest on deposits in the Fed instead of forcing that money into the economy as loans and credit.  I am not saying we should force the producing of bad loans but we should force the banks to find good loans and business to deploy that money to rebuild their balance-sheets.

Reuters – In a retreat by the House on one of the most contentious parts of historic Wall Street reform legislation, Representative Barney Frank said the House would go along with the Senate’s plan to make the watchdog a part of the U.S. central bank.

House Democrats negotiating final changes to the legislation will also seek to subject payday lenders, check cashers and private student loan providers to the watchdog’s supervision, said a statement from Frank.

House and Senate negotiators are set to resume talks over the wide-ranging reforms on Tuesday.


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