New York Times
By: Sewell Chan
February 27, 2010
The chairman of the Senate Banking Committee on Friday proposed creating a Bureau of Financial Protection inside the Treasury Department to regulate mortgages, credit cards, payday loans and other consumer products.
The proposal, a copy of which was provided to The New York Times, represents an attempt at compromise by the chairman, Senator Christopher J. Dodd, Democrat of Connecticut, on the issue that has been the greatest source of discord over the regulatory overhaul. It was not clear whether the Republicans on the committee would go along, and aides to Mr. Dodd could not be reached for comment Friday evening.
According to the proposal, Mr. Dodd has agreed to house the new bureau within the Treasury -- as opposed to creating a standalone agency, as the Obama administration had sought -- but insisted that the bureau have a director appointed by the president, a dedicated budget comprised of assessments on large banks and nonbank lenders, and authority to adopt regulations.
Banking groups have lobbied against the proposal for the agency, which was part of the House version of the regulatory package, adopted in December. Opponents say the agency would interfere with the duty of regulators to ensure the "safety and soundness" of banks.
The Dodd proposal would require the bureau to consult with other regulators before issuing rules and to make public any objections raised by those regulators, along with an explanation of how the bureau addressed the concerns. Those regulators also could appeal the proposed rule to a new interagency council tasked with detecting systemic risks.
The proposal would exempt banks and credit unions with assets of $10 billion or less. It would give the bureau the power to enforce regulations on large banks and nonbank lenders, in conjunction with other regulators, but would largely have to defer to other regulators in the case of smaller banks.