February 5th, 2010
03:21 PM ET
5 years ago

No Senate deal on consumer financial protection

Washington (CNNMoney.com) - The fate of a consumer financial protection agency was thrown in doubt Friday, as the Senate Banking Committee chief said he planned to push a bill forward without Republican support.

Sen. Christopher Dodd, D-Conn., said on Friday that banking committee staff will draw up draft legislation on all regulatory reform to be voted on later this month - even though, "for now, we have reached an impasse" with the ranking Republican on that committee, Sen. Richard Shelby, R-Ala.

The sticking point is the consumer financial protection agency, which has long been considered the signature piece of the legislation offered by the Obama administration for redoing the regulatory system after the financial collapse.

Shelby said he supports consumer financial protection, but he's concerned about the financial health of companies. He wants the regulator who protects consumers to also consider financial firms' health, to strengthen "both consumer protection and safety and soundness regulation."


"I will not support a bill that enhances one at the expense of the other, however," Shelby said.

Big business and banking industry groups have targeted the consumer agency in particular, making it a priority to defeat. Financial service companies spent at least $439 million on lobbying in 2009, according to the Center for Responsive Politics. The U.S. Chamber of Commerce spent $74 million, although they also lobbied on health care issues.

As envisioned by the White House, the consumer financial protection agency would be a stand-alone department that would create and enforce consumer protection rules on products such as mortgages and credit cards.

Specifically, both the White House and Dodd want an independent consumer protection regulator with strong powers to regulate these products, given that existing regulators have been faulted for falling down on the job of protecting consumers during the financial crisis.

Bipartisan support sought: Last December, the House passed, along party-lines, what's considered a strong, stand-alone consumer financial protection agency - even though certain financial products, such as auto
loans, got exempted.

But the consumer financial protection agency always had a tougher path in the Senate. Democrats need Republicans to pass regulatory reform in the Senate, especially since Democrats lost their filibuster-blocking majority.

"I don't want to go to the floor of the United States Senate begging for a 60th vote," Dodd told the Obama administration during a Tuesday hearing. "I'm not going to do that."

Since November, Democrats and Republicans have been working together on key parts of regulatory reform. They've come to agreements in other areas, like a winding down process for giant financial firms now considered too big to fail, according to comments made by senators made during a Thursday hearing.

To win bipartisan support on the consumer protection part, Dodd had signaled weeks ago that he'd be willing to give up on the idea of a stand-alone consumer agency and consider placing a consumer regulator in an existing regulatory agency.

But Dodd would only agree to such a concession if such a consumer regulator could act independently, and get strong and separate powers to make and enforce rules on a range of financial products, such as auto loans, Congressional aides and lobbyists told CNNMoney.

The impasse is over how much independence and power a proposed consumer financial protection regulator would have, aides and lobbyists say.

"When you have a body that identifies abusive practices, it needs its own set of teeth to go out and say stop," said Reid Cramer, director of asset building at the New American Foundation, a left-leaning think tank.

What's unclear is how the impasse over consumer financial protection will impact the rest of the regulatory reform agenda in the Senate.

Sen. Bob Corker, R-Tenn., for one, said in a statement that he intendedto continue working with Democrats through the weekend on the measures that would prevent banks from getting too big to fail.

"While I'm disappointed that Chairman Dodd and Ranking Member Shelby have reached an impasse, it won't alter my efforts toward a bipartisan bill," Corker said.

Republicans on the committee may feel obliged to oppose a final regulatory reform bill, despite months of bipartisan negotiations, if they deem that the consumer financial protection powers could threaten banks' safety and soundness.

"We don't think it's a good idea to separate regulation for the bank itself from the product it sells," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, a banking group.

On Friday, concerns about the consumer financial protection agency ricocheted across Capitol Hill. Rep. Niki Tsongas, D-Mass., sent e-mails to lawmakers asking them to sign a letter urging Dodd to "support a strong, independent Consumer Financial Protection Agency."

The Senate Banking committee is aiming to start amending and voting on a final regulatory reform package starting the week of Feb. 22.


Filed under: Chris Dodd • Senate
soundoff (50 Responses)
  1. Mark

    Is this the legislation that would allow the government to take over any company it deemed to big to fail?

    Or if they do it chicago style, any company that has a different political viewpoint that obamy? Sort of like what they are doing to Toyota after it announced it is closing down the only plant it has that employs UAW workers. obamy HAS to keep the unions happy.

    February 5, 2010 04:45 pm at 4:45 pm |
  2. John, Brooklyn, NY

    Thank goodness we have both a US Senate and a Supreme Court that stands up for the rights of those poor, downtrodden multinational corporations and their rights to gouge the American people spent millions to buy elections.

    What we do without those bleeding heart Republicans!!!

    February 5, 2010 04:57 pm at 4:57 pm |
  3. Michael

    Cornelius Vanderbilt was a big GOP supporter; he stated the party position perfectly:
    "The public be d@mned".

    February 5, 2010 05:00 pm at 5:00 pm |
  4. Stop the Nonsense

    Obama/Liberal haters- Do you STILL think it's all the Democrats not getting thngs done?
    " MARK"- are you kidding??? This bill is designed to protect consumers- the only person adding something mentioning the banks is a Republican! How is it no matter what is said, people like you seem to point everything to those you hate,regardless of what the subject?
    For the record "Mark" – Democrats did not kidnap the Lindburgh child, put Hilter in control, Blow up Appolo 13, Bomb the TWC's or for that matter start the Iraqi war. Your conspiracies don't hold water.

    February 5, 2010 05:04 pm at 5:04 pm |
  5. Vic of New York

    Yeah, and to top that.... "Suntan Boner" was in New York the week meeting with Jamie Diamond – $15,000,000 (million) bonus – looking for campaign money to protect the big banks from financial reform!

    Hey TEA baggers and Republicans - guess you like when your Senators are cutting deals to maintain the status-quo on Wall Street!

    Good luck.... you deserve getting screwed!

    February 5, 2010 05:04 pm at 5:04 pm |
  6. Joyce

    It is sad to realize that Republicans are more interested in the state of their party rather than the State of the Union!

    February 5, 2010 05:09 pm at 5:09 pm |
  7. GREGOIRE

    Man... you liberals are just spiteful mean people. Do you guys honestly believe the s#it that you type? SERIOUSLY? If you do, I truly feel sorry for you. Not only do you sould like ignorant children, but you totally remove ANY validity your argument MIGHT have had, because you just focus like a freakin lazer beam on calling names. The fact that you ACTUALLY think we want to destroy this country... at best we're trying to save you idiots from yourselves. ALWAYS come back to this question when you're forming an opinion on something political: "In the end... who does this help, who does this hurt, how long can we sustain this, and who's paying the bill?" If you used those questions HONESTLY in forming an opinion... we'd all get along a lot better.

    February 5, 2010 05:09 pm at 5:09 pm |
  8. Hud

    He wanted the banks to fail back then,but he don't want them to fail now . These people are off the chain.

    February 5, 2010 05:16 pm at 5:16 pm |
  9. Annie, Atlanta

    Thanks Chris Dodd. What, you have a lucrative job waiting for you in the financial industry after you retire at the end of the year? And as far as Shelby is concerned, he wants pork for his state for a foreign contractor or he's going to hold his breath? This is absurd. It's time for senators to go, every time they're up for re-election. Career politicians are in it for themselves, not the public service.

    February 5, 2010 05:18 pm at 5:18 pm |
  10. Marc

    GREGOIRE – pot calling the kettle?

    February 5, 2010 05:27 pm at 5:27 pm |
  11. Marc

    Mike1952 – Talk about spin! It was the (politically motivated) less interference in the mortgage lending practices of the banks. LESS interference/control, NOT MORE, caused this.
    For instance, it is true that all started way back with Clinton, but in the law that Clinton signed there were safeguards that were removed in GWB's first term. Whatever control that the governm,ent could have of the mortgage lending practices was NOT appreciated by the (R) government at the time.
    Get your facts straight.

    February 5, 2010 05:34 pm at 5:34 pm |
  12. Bruce

    To Gregoire...about half way down in your rant, you called the Dems "idiots". Isn't name-calling the same thing you were discusted about in the first half of your rant? That' just like you Rethugni-can'ts!! You can give it but you can't take it. LOL!

    February 5, 2010 05:35 pm at 5:35 pm |
  13. Florida Joe

    Shelby?....the same Shelby that is holding the Senate hostage until he gets his billions of $$$$ for his state?........that one.?....What a joke he is................

    February 5, 2010 05:40 pm at 5:40 pm |
  14. bb

    Shove it through!!! 50 + 1.
    Rethugs and Bush passed their Tax cuts (the ones that hurt us), the $7 trillion Medicare Part D and a ton of other things this way.
    Just do it!

    February 5, 2010 05:56 pm at 5:56 pm |
  15. bb

    Oh Gregorie oh Gregorie....get a clue.

    February 5, 2010 05:58 pm at 5:58 pm |
  16. ran

    If the Democrats and this President would just open up all debate to the media we the people will see who is the real cause for our problems: the Republicans' fear/hate/obstructionism/purist actions.

    People get your head out of your ___ and look around at who is doing nothing to help us and who is doing what they can to get us out of the messes we are in.

    Vote TRUE Democrats or Independents in 2010/2012. Do not reward the Republicans for their "NO" actions.

    February 5, 2010 06:00 pm at 6:00 pm |
  17. MikeH

    I pledge allegiance to the flag,

    of the Corporate States of AmeriKa.

    And to the Plutocracy for which it stands,

    one national consortium under Gold,

    with privelege and impunity to those who can afford it.

    February 5, 2010 06:02 pm at 6:02 pm |
  18. chris

    I thought slavery was banned, however, apparently it still exists cause Gregoire just got owned!!!

    February 5, 2010 06:14 pm at 6:14 pm |
  19. An 8 year old ELEPHANT dung heap, does not transform into compost in just 1 year!

    An impasse with a Red over protecting the little guy from Wall Street?

    How republiklan!

    February 5, 2010 06:33 pm at 6:33 pm |
  20. Albert R., L.A., CA

    Republican leaders are global corporate Loylist and will have nothing to do whith any laws protecting humans.

    February 5, 2010 06:41 pm at 6:41 pm |
  21. JonDie

    "Shelby said he supports consumer financial protection, but he's concerned about the financial health of companies."

    You folks at CNN are bald-faced liars. Shelby do NOT support meaningful consumer financial protections, that's why he's blocking them.

    February 5, 2010 06:42 pm at 6:42 pm |
  22. Ray in Nashville

    @ Mark: Fox News called, they want you back on their website.

    Seriously, do you really think the problem Toyota is having is because of the United States government? That has to be the most whacked out conspiracy theory I have heard in years. It seems to me that Toyota is having problems because they have a couple of design flaws in their engineering packages that are killing people.

    February 5, 2010 06:50 pm at 6:50 pm |
  23. Angie in PA

    Once again Republicans caring about the Banks and Wall St before they care about us the People. well why not the banks funnel Millions of dollars to the republicans to kill bills like financial regulation to protect us the people, Silly me why would I think they would be on our side SAME OLD PARTY! NOTHING NEW!

    February 5, 2010 07:16 pm at 7:16 pm |
  24. sara

    Despicable....Shelby and the one from Kansas is holding up America's Progress..........Where is "EARMARK" KING McCain....oh, I forgot, the rants were for "play".

    February 5, 2010 07:18 pm at 7:18 pm |
  25. Gerry NH

    Actually the Community Reinvestment Act was made into Law in 1977 when Jimmy Carter was president. Actually the safeguards can be removed by congress. In 2004 GWB asked congress to reinvestigate the act but congress refused. It seem we like to blaame the presidents for the mess America is in but remember congress makes the laws. The president can only approve the laws or veto the bills congress sends him.

    February 5, 2010 07:24 pm at 7:24 pm |
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