So much for that!
Senate Panel Said to Scrap Obama’s Consumer Agency
By Alison Vekshin and Robert Schmidt
March 1 (Bloomberg) -- Senate Banking Committee negotiators, working through the weekend, agreed to drop the stand-alone consumer agency sought by the Obama administration and opposed by the banking industry, removing an obstacle that has stalled new U.S. financial rules.
Committee Chairman Christopher Dodd, a Connecticut Democrat, joined panel Republicans in seeking an alternative to the Obama proposal. Both parties are still aiming for a deal on placing consumer powers within another regulator, said people with knowledge of the talks who declined to be identified because the discussions are private.
“While this presents a new set of issues for regulatory reform, it does resolve a fairly significant and sensitive one for the banking industry: a consumer financial protection agency completely de-linked from the safety-and-soundness regulators,” said Kevin Petrasic, a lawyer at Washington-based Paul, Hastings, Janofsky & Walker LLP.
The negotiations focused on President Barack Obama’s Consumer Financial Protection Agency, which stalled talks on the overhaul, with Dodd proposing a bureau in the Treasury and Senator Richard Shelby, the committee’s top Republican, suggesting such powers go to the Federal Deposit Insurance Corp. Neither proposal advanced, a Senate aide said. Talks between the two lawmakers on the bill collapsed last month.
Senator Bob Corker, a Tennessee Republican and an opponent of the independent agency who is working with Dodd on a compromise, has proposed that consumer responsibilities be assigned to the Federal Reserve, said a person familiar with the senator’s discussions.
‘Whole New Bureaucracy’
The financial-services industry opposes the consumer agency more than any other provision in Obama’s plan and has lobbied lawmakers to defeat it. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon called the agency “just a whole new bureaucracy” on a December conference call with analysts.
“The Senate negotiators are realists,” said Gilbert Schwartz, a former Federal Reserve lawyer and partner at Schwartz & Ballen LLP in Washington. “They recognized that the CFPA was a lightning rod and the only way to get financial reform legislation through was to back away from it.”
Dodd proposed a Bureau of Financial Protection in the Treasury with power to write rules for financial-services companies, funded mainly through industry fees and headed by a director appointed by the White House, according to a two-page summary Dodd circulated during the weekend.
“I’m more concerned about what powers it has,” Dodd said in a Feb. 26 interview for Bloomberg Television’s “Political Capital With Al Hunt.”
Republican Rejection
Committee Republicans rejected Dodd’s proposal because it split consumer protection from the safety-and-soundness responsibility of bank regulators, according to a Senate aide who declined to be identified because the talks are private.
“It is important for the CFPA to be located in an agency with substantial safety-and-soundness responsibilities so that these goals work together rather than at cross purposes,” said Oliver Ireland, former Federal Reserve associate general counsel and now partner at law firm Morrison & Foerster LLP in Washington. “This probably means it should not be at Treasury.”
Shelby’s staff on Feb. 26 circulated two proposals to committee Republicans. One calls for a three-member Financial Products Consumer Protection Council with a chairman appointed by the president, the FDIC chairman and the director of a newly created federal bank regulator, according to a one-page summary obtained by Bloomberg News.
FDIC, Fed
The other would establish a consumer protection division at the FDIC to be run by a director appointed by the president with a five-member board, according to a two-page summary.
Both Republican proposals give the consumer unit the power to write rules, including banning unfair or deceptive practices, a power now held by bank regulators including the Federal Reserve. It would develop plain-English disclosures and lead all federal consumer financial literacy efforts.
Dodd rejected Shelby’s proposal, according to the Senate aide. Talks continued through the weekend, Corker spokeswoman Laura Herzog said yesterday in an e-mail.
The House in December passed a financial overhaul bill that included a stand-alone consumer agency. The agency is needed because regulators consider consumer protections “as a second thought,” House Financial Services Committee Chairman Barney Frank, the architect of the House bill, said in a Feb. 18 Bloomberg Television interview.
Webb Bonus Plan
Separately, Senator James Webb, a Virginia Democrat, plans to advance a proposal to tax bonuses for companies that received at least $5 billion in the taxpayer bailout. Webb will offer an amendment to legislation extending business and personal tax provisions that expired in 2009, said Jessica Smith, Webb’s spokeswoman.
Webb and Senator Barbara Boxer, a California Democrat, proposed a 50 percent tax on any bonuses exceeding $400,000.
The Senate last year retreated from a bill approved by the House that would have put a 90 percent tax on bonuses at firms receiving U.S. aid. The House passed the measure after retention pay for AIG employees sparked a public outcry.
Senate Panel Said to Scrap Obama’s Consumer Agency
By Alison Vekshin and Robert Schmidt
March 1 (Bloomberg) -- Senate Banking Committee negotiators, working through the weekend, agreed to drop the stand-alone consumer agency sought by the Obama administration and opposed by the banking industry, removing an obstacle that has stalled new U.S. financial rules.
Committee Chairman Christopher Dodd, a Connecticut Democrat, joined panel Republicans in seeking an alternative to the Obama proposal. Both parties are still aiming for a deal on placing consumer powers within another regulator, said people with knowledge of the talks who declined to be identified because the discussions are private.
“While this presents a new set of issues for regulatory reform, it does resolve a fairly significant and sensitive one for the banking industry: a consumer financial protection agency completely de-linked from the safety-and-soundness regulators,” said Kevin Petrasic, a lawyer at Washington-based Paul, Hastings, Janofsky & Walker LLP.
The negotiations focused on President Barack Obama’s Consumer Financial Protection Agency, which stalled talks on the overhaul, with Dodd proposing a bureau in the Treasury and Senator Richard Shelby, the committee’s top Republican, suggesting such powers go to the Federal Deposit Insurance Corp. Neither proposal advanced, a Senate aide said. Talks between the two lawmakers on the bill collapsed last month.
Senator Bob Corker, a Tennessee Republican and an opponent of the independent agency who is working with Dodd on a compromise, has proposed that consumer responsibilities be assigned to the Federal Reserve, said a person familiar with the senator’s discussions.
‘Whole New Bureaucracy’
The financial-services industry opposes the consumer agency more than any other provision in Obama’s plan and has lobbied lawmakers to defeat it. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon called the agency “just a whole new bureaucracy” on a December conference call with analysts.
“The Senate negotiators are realists,” said Gilbert Schwartz, a former Federal Reserve lawyer and partner at Schwartz & Ballen LLP in Washington. “They recognized that the CFPA was a lightning rod and the only way to get financial reform legislation through was to back away from it.”
Dodd proposed a Bureau of Financial Protection in the Treasury with power to write rules for financial-services companies, funded mainly through industry fees and headed by a director appointed by the White House, according to a two-page summary Dodd circulated during the weekend.
“I’m more concerned about what powers it has,” Dodd said in a Feb. 26 interview for Bloomberg Television’s “Political Capital With Al Hunt.”
Republican Rejection
Committee Republicans rejected Dodd’s proposal because it split consumer protection from the safety-and-soundness responsibility of bank regulators, according to a Senate aide who declined to be identified because the talks are private.
“It is important for the CFPA to be located in an agency with substantial safety-and-soundness responsibilities so that these goals work together rather than at cross purposes,” said Oliver Ireland, former Federal Reserve associate general counsel and now partner at law firm Morrison & Foerster LLP in Washington. “This probably means it should not be at Treasury.”
Shelby’s staff on Feb. 26 circulated two proposals to committee Republicans. One calls for a three-member Financial Products Consumer Protection Council with a chairman appointed by the president, the FDIC chairman and the director of a newly created federal bank regulator, according to a one-page summary obtained by Bloomberg News.
FDIC, Fed
The other would establish a consumer protection division at the FDIC to be run by a director appointed by the president with a five-member board, according to a two-page summary.
Both Republican proposals give the consumer unit the power to write rules, including banning unfair or deceptive practices, a power now held by bank regulators including the Federal Reserve. It would develop plain-English disclosures and lead all federal consumer financial literacy efforts.
Dodd rejected Shelby’s proposal, according to the Senate aide. Talks continued through the weekend, Corker spokeswoman Laura Herzog said yesterday in an e-mail.
The House in December passed a financial overhaul bill that included a stand-alone consumer agency. The agency is needed because regulators consider consumer protections “as a second thought,” House Financial Services Committee Chairman Barney Frank, the architect of the House bill, said in a Feb. 18 Bloomberg Television interview.
Webb Bonus Plan
Separately, Senator James Webb, a Virginia Democrat, plans to advance a proposal to tax bonuses for companies that received at least $5 billion in the taxpayer bailout. Webb will offer an amendment to legislation extending business and personal tax provisions that expired in 2009, said Jessica Smith, Webb’s spokeswoman.
Webb and Senator Barbara Boxer, a California Democrat, proposed a 50 percent tax on any bonuses exceeding $400,000.
The Senate last year retreated from a bill approved by the House that would have put a 90 percent tax on bonuses at firms receiving U.S. aid. The House passed the measure after retention pay for AIG employees sparked a public outcry.
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