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Congress Trying to Come Together for Consumer Loan Protection


Senate Banking Committee Chairman Christopher Dodd, D. Conn., is proposing another agency for the federal government. Tentatively calling it the Bureau of Financial Protection, and wanting it to be placed in the Treasury Department, the idea is for this new bureau to supervise banks in the issuance of mortgages, credit cards, and other financial products. This is a different approach to the problem than the White House's proposal to create a stand-alone Consumer Financial Protection Agency.

Critics say that this bureau approach would create another bureaucracy with powers that would overlap those of other federal banking regulatory agencies. Another criticism is the housing within the Treasury, and the proposal that the new bureau's director would be appointed by the President. This, according to some, would be too political of a position.

The Democratic proposal for an independent agency to protect consumers is feared by Republicans who believe that it will crack down so hard on banks that lending will dry up. Senator Dodd's proposed bureau is an attempt to bring the two sides together on the issue of consumer protection in mortgage, credit card, and other financial activities. One requirement is said to be that the director of this bureau consult with other banking regulators before issuing new rules that might threaten the safety and soundness of banks.

Many consumers have seen their credit card interest rates climb, sometimes in huge leaps, to as much as 30% in many cases. And, this is the case, even when no payments were late or missed. The recent profit announcements of some of the largest banks is creating a pressure to regulate their activities in consumer lending. There isn't a lot of positive opinion that this new bureau approach will be successful, as the sides are far apart on the issues.

Isn't the Federal Trade Commission already established for this reason.  At least that's what their tag line is on their website:  "Protecting America's Consumers."  Since history is known to repeat itself, then I once again have little faith in any "protection" agency the government establishes.   At the rate the current presidency is going, the people will need to establish an agency to protect ourselves from government.

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