February 5th, 2010
03:21 PM ET
8 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. Tram

    Are all Republicans this stupid? Don't they realize that if you play fair with the consumers, give everyone a level, logical playing field, businesses will thrive? Treat the customer right and they'll come back.

    February 5, 2010 03:25 pm at 3:25 pm |
  2. Average American

    The republicans are blocking consumer protection legislation because they are afraid it might hurt....wait for it....THE BANKS!

    February 5, 2010 03:27 pm at 3:27 pm |
  3. Ray in Nashville

    You just have to love the hypocrisy of some of these people. At the end of the Bush days, when TARP was being proposed, Senator Shelby stood on camera and opposed the measure, saying we should go ahead and let the banks fail. Now he says he doesn't want to impose any legislation that endangers their health. Sheesh!

    February 5, 2010 03:28 pm at 3:28 pm |
  4. AEK

    Ka-ching. Money once again in Mr. Shelby's pocket. This guy is unbelievable. A poster child for no scruples whatsoever. I wonder if he's a Republican?

    February 5, 2010 03:28 pm at 3:28 pm |
  5. Willa-PA

    Do what you have to Dems...if you think the republicans are going to be of any help in protecting mainstream Americans on anything, forget it, they are the party of NO and nothing is going to change that. They are the party for the rich and corporations, has been and always will be.

    February 5, 2010 03:30 pm at 3:30 pm |
  6. shamgar50

    The party of No, more worried about banks than consumers. Wow, what a shock!

    February 5, 2010 03:30 pm at 3:30 pm |
  7. Chuck Anaheim,Ca

    And the consumer takes in the shorts again. Coming this close to a depression because of the current banking laws means nothing to the republicants because they may upset their paymasters. The do nothing congress and senate march on while our country suffers and fails. Thanks!

    February 5, 2010 03:31 pm at 3:31 pm |
  8. T. K.

    What in the world do you expect from the party of no-–NO!!

    February 5, 2010 03:32 pm at 3:32 pm |
  9. awaitingliberalizationbyCNN

    Hopefully, they won't do what they did when they decided to protect us from credit card companies. Rates soared. I can see by the number of libertard responses that they don't understand the legislation and what it does. Liberals just put a good sounding name on something that will screw the consumer. They are so dumb.

    February 5, 2010 03:37 pm at 3:37 pm |
  10. Bob (Illinois)

    Shelby wins my Jerk of the Day Award. He doesn't want any bipartisan bill. All he wants is for Northrop Grumman to get the Force Tanker contract. Why else would he put a blanked 'hold' on so many nominations?

    Some of the Senate rules are insane!

    February 5, 2010 03:45 pm at 3:45 pm |
  11. Dar

    There is good parts to this on both sides of the fence.
    Goverment should not have full control over any business but be able to set caps on what the banks can do. This may have helped curb what just to the banking system when it crashed.
    The crazy loan tactics that were happening should have never happened and our good friend Barney Franks said to us all: The banking system is in good shape, fanie and mac are whole.

    If Barney would have been doing his job................. Who knows, maybe our houses would still be worth what we paid for them.

    This is our fault, we hired these people for our security and most of them failed us. time to get new employees folks.

    2010/2012 REAL Change is coming

    February 5, 2010 03:49 pm at 3:49 pm |
  12. Mark

    I don't think Washington gives a crap about the consumers, children are dying in cribs, turns out the regulations for cribs haven't been updated by the folks in congress since 1982!

    February 5, 2010 03:50 pm at 3:50 pm |
  13. Boisepoet

    "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."

    Hogwash! They'll oppose it because they want to maintain the status quo and do not want any progress made on any problems that average Americans face, because it will show that Obama's administration is looking out more for people than corporations.

    February 5, 2010 03:51 pm at 3:51 pm |
  14. j

    The Conservatives have made it impossible to get anything done through the legislature. The government is becoming increasingly dysfunctional. DON'T vote Conservative in 2010, vote Progressive.

    February 5, 2010 03:53 pm at 3:53 pm |
  15. Greg

    Neat how the bank lobbyist's and Republicans' quotes lined up. Wonder how that happened.

    February 5, 2010 03:55 pm at 3:55 pm |
  16. Donald D.

    I am very concened as to what it is that the GOP really wants. Are the GOP members interested in bipartisan efforts or are they interested in killing every bill just to see if they can score victories in the upcoming mid-term election. Well, if their strategy is, let's say "NO" to anything that is put forward by the governing Democratic party so they the GOP may win in the House or Senate is that what the American people really want from those they sent to Washington to work on their behalf. Also, if the intent is to stall the progress of President Obama then these politicians should be voted out of office. They were sent ot Washington to accomplish goals for the constituents, not to score political points or vilifiy each other just to gain in the polls . Stop the games in Washington D.C. and get on with the people's business.

    February 5, 2010 03:56 pm at 3:56 pm |
  17. NC

    Shove it through Democrats and forget the party of No.

    February 5, 2010 03:59 pm at 3:59 pm |
  18. John

    You've got to know that it was just this kind of thing that folks voted Obama in for. Democrats are missing a golden opportunity if they don't get this done.

    February 5, 2010 04:00 pm at 4:00 pm |
  19. Jim

    Dar" The crazy loan tactics that were happening should have never happened and our good friend Barney Franks said to us all: The banking system is in good shape, fanie and mac are whole"

    The crazy loan tactics were due to the Republican Congress passing the No & Low Documentaion rules in 2002 and the repeal ofGlass Steagal by the GOP led congress in 1999.

    February 5, 2010 04:06 pm at 4:06 pm |
  20. Jim

    So let me get this straight, the GOP wants to set up a Consumer Protection Act that protects the Banks? and what about the consumer?

    Let me see, the Banks can unload unlimited amounts of $$ on candidates and the consumer can't. Who gets screwed here???

    February 5, 2010 04:08 pm at 4:08 pm |
  21. Mike1952

    I'm confused as to what more another agency can do to "protect" consumers. The only big bank failures I'm aware of were due to government interference in the mortgage lending practices they employed. The housing bubble contributed along with artificially low interest rates, also due to government interference. How will more government prevent government from screwing up the banks and other businesses? I guess our progressive friends have an answer. Oh, I remember. Government is good. Individual freedom and personal accountability are bad. How could I forget.

    February 5, 2010 04:18 pm at 4:18 pm |
  22. ThinkAgain

    Shelby says he, "wants the regulator who protects consumers to also consider financial firms' health, to strengthen 'both consumer protection and safety and soundness regulation.' "

    If those companies can't survive without gouging their customers and relying on predatory practices to make a profit – then they don't deserve to be in business!

    We need meaningful consumer protection RIGHT NOW!

    I'm sick and tired of coddling these so-called "captains of industry" who don't give a rat's fanny about anyone or anything except themselves.

    February 5, 2010 04:20 pm at 4:20 pm |
  23. Donald D.

    Democrats please have some guts. If the Republicans refuse to cooperate, use the reconcilliation process in the Senate to get work done on behalf of the American people who sent you to Washington. The bipartisan support you are seeking may never come as the Republicans strategy is, "Say No to everything until the midterm election when they will point out to the constituents that even with a majority you Democrats could not get anything done". Howard Dean was right in saying the Republicans would use whatsoever the means was to get the job done. They would ram it through the House and Senate. Wake and smell the coffee. Many of these Republicans have only one agenda which is: They want to see the President fail even if it hurt the country.

    February 5, 2010 04:21 pm at 4:21 pm |
  24. Scottyrw

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

    Who do you think pays the hush money to Shelby and the Repubs. These guys could care less about the American people. They only watch out for big insurance, big oil and big financial companies under the cover of " If you take care of the companies they take care of the workers" SURE THEY WILL!

    February 5, 2010 04:34 pm at 4:34 pm |
  25. susanj

    How anyone in their right mind would every vote for a Republican when all they do is obstruct is just totally mind boggling. We need things done in this country and all they do is obstruct and say no. They do not care about the citizens of this country. All they care about are big businesses and banks and let's not forget their beloved insurance companies. What is wrong with you people? Are you that racist that you can't see what's right anymore. The reason the Rethuglicans are doing this is because they cannot stand the fact that there is a black President. This president isn't so far left that everything that comes before them has to be stopped. It's because he is black and nothing will ever change my mind.

    February 5, 2010 04:43 pm at 4:43 pm |
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