Well, as much as Dodd was not as tough on banks as many would like, his lame duck status is turning Potemkin reforms into an utter joke.
The element of the proposed consumer financial protection agency that would have had a real impact on the predatory practices was the requirement to offer plain vanilla products. But nope, can’t have firms that enjoy extensive support by the state have their pillagingprofit seeking crimped in any way.
With Dodd on his way out, the consumer financial protection agency is likely to be folded into the Treasury, where it is certain to be neutered. The argument is that the operations of the to-be-created agency might conflict with those of the systemic risk regulator. Huh? First, I’d like to hear some hypothetical examples where the two might disagree. Seems to me safe retail products is pro-stability in the overwhelming majority of cases. Infrequent instances of friction between two agencies with distinct mandates is a pretty weak argument for neutering one of them. And if there were a bona fide tradeoff between consumer protection and stability, it might be salutary to have that conflict be explicit to force examination and debate.
To the news on Dodd, via the Wall Street Journal:
Senate Banking Committee Chairman Christopher Dodd is considering scrapping the idea of creating a Consumer Financial Protection Agency….
Mr. Dodd’s offer is conditional, however: Republicans must agree to create a beefed-up consumer-protection division within another federal agency…
Mr. Dodd’s shift comes amid a new sense of urgency to enact revamped rules governing the financial sector in what is now a narrow window before the November election.
Bipartisan support is believed necessary to pass such legislation, as Democrats aren’t likely to get the 60 Senate votes needed to overcome a potential Republican filibuster. With Mr. Dodd no longer seeking re-election, some of the pressure to apply a populist stamp on new financial regulations has eased.
Mr. Dodd’s openness brings him more in line with the top Republican on the Senate banking panel, Richard Shelby of Alabama, who has referred to the Consumer Financial Protection Agency as a “nanny state.”
Many in Washington and on Wall Street believe the chances of Congress reaching an agreement on financial regulations hinges on whether Messrs. Dodd and Shelby can work out a compromise, and staffs have been locked in intense negotiations for weeks.
Representatives of Messrs. Dodd and Shelby wouldn’t discuss the state of negotiations, other than to say no agreement has been reached.
Talks could fall apart, and Mr. Dodd could still decide to push for creation of an independent agency.
Mark 
Ina Pickle 
Francois T 
Robespierre 
bob 
Hugh 
Bob_in_MA 
Justicia 
number2son 
Sagebrush 
Posts
Nearly every other country has decided that financial consumer protection is a good idea. Most have a varying degree of success and generally you don’t end up with plain vanilla offerings. What you do end up with is predatory small print being thrown out. I cannot help but think that consumer protection is being miss sold in the US because in general consumer protection actually helps the banks in many ways. In the same way that small print gets thrown out, so do liar loans with no proof of income. Proper financial consumer protection should work both ways to protect the user and to protect the bank. Yes it does cost the consumer and it limits credit availability but in the long run it promotes a healthier system. So the short term view prevails again and the US ends up with an inappropriate financial standards setter with conflicting objectives. Where is Elizabeth Warren when you need her?
http://www.huffingtonpost.com/elizabeth-warren/america-without-a-middle_b_377829.html