Dodd may drop popular reform plans
Senator Christopher Dodd (D-CT)
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Steve Chiotakis: There's been a lot of talk about getting some financial regulatory reforms through Congress. And one of the components of President Obama's plan is this new financial Consumer Protection Agency. But now that may be a long shot. Marketplace's Sam Eaton is with us live in our studio here in Los Angeles with the latest. Good morning, Sam.
Sam Eaton: Good morning, Steve.
Chiotakis: So why the sudden change in direction?
Eaton: Well, it all centers around Senate Banking Committee Chair Christopher Dodd, the Connecticut Democrat. He recently announced that he won't be seeking re-election next November, but that doesn't change the pressure he and other Democrats are feeling to pass some kind of financial reform bill before those elections in order to ease voter backlash. The problem is to do that, it looks like Dodd will have to drop the idea of creating new Consumer Protection Agency, which is essentially the cornerstone item in Obama's proposed financial reforms. And the word today that Dodd is willing to do just that as a way to compromise with Republicans isn't playing out well with consumer advocates. Here's Heather Booth with American's for Financial Reform:
Heather Booth: Without a serious consumer financial protection focus. That would not be real reform. And we think that the politicians understand that this is what Main Street wants and that it's just a question of are they responding to Main Street or are they responding to Wall Street.
Chiotakis: Alright, so then Sam, what's the alternative here?
Eaton: Well it looks like the idea of beefing up consumer protections is still on
the table, but instead of a standalone consumer protection agency, those powers may be rolled into an existing department. And that's exactly what the banking industry has been calling for. Here's Scott Talbot, the head lobbyist with the Financial Services Roundtable:
Scott Talbot: If you under-regulate, you can see, we saw what happened. But if you over-regulate, you could stifle creativity, innovation and the free flow of capital. And that won't benefit consumers, banks or the economy.
The bottom line here, though, is that this move would represent a major political concession in Obama's financial reform efforts.
Chiotakis: All right, Marketplace's Sam Eaton, here in the studio. Sam, thanks.