Fed to have own consumer watchdog
TEXT OF INTERVIEW
Bill Radke: Senate negotiators this morning appear close to a deal on new rules for Wall Street. The legislation would also create a government watchdog for consumers, but one that’s less independent than some would like. Marketplace’s Nancy Marshall Genzer joins us live from Washington. Nancy, I know a big sticking point has been whether there’ll be a separate Consumer Financial Protection Agency. Where does that stand?
Marshall Genzer: Well, the latest reports this morning say Democratic Senator Chris Dodd and Republican Bob Corker have agreed to put a consumer watchdog agency inside the Federal Reserve. Now as you mentioned, consumer advocates had wanted a stand-alone agency. They think the Fed is tilted too much toward the banks. But the watchdog in the Fed would have the power to write and enforce regulations on things like credit cards and mortgages.
Radke: And these financial reforms were also supposed to deal with the idea of “too big to fail” banks. Is that idea still in there?
Marshall Genzer: It certainly is — at least, at this point. This compromise would create a council of regulators and they would decide which financial institutions are big enough to get special government supervision. That isso big they would threaten the economy if they failed. I talked to Alistar Milne about this, be’s an economist at Cass Business School at City University London:
Alistar Milne: It’s sort of saying we’re going to keep things simple, we’re not going to make things complicated so nobody knows what’s going on. We’re going to keep to our core businesses, not going to get involved in a lot of other stuff that would be difficult to disentangle.
Of course, the House has already passed its own financial reform legislation, so whatever the Senate passes will have to be reconciled with the House bill.
Radke: Marketplace’s Nancy Marshall Genzer in Washington. Thank you.
Marshall Genzer: You’re welcome.
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