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A new federal agency dedicated to consumers' financial protection -- regulating everything from credit cards to home mortgages -- could be a key part of the Obama Administration's financial reform plans. Details of the administration's financial regulation proposal should be released later this week.
In a Washington Post Op-Ed piece excerpted on WhiteHouse.gov today, Treasury Secretary Timothy Geithner and NEC Chair Larry Summers laid out the Obama administration's intentions when it comes to financial reforms and enhanced safeguards for consumers:
"Our current regulatory regime does not offer adequate protections to consumers and investors. Weak consumer protections against subprime mortgage lending bear significant responsibility for the financial crisis. The crisis, in turn, revealed the inadequacy of consumer protections across a wide range of financial products -- from credit cards to annuities. Building on the recent measures taken to fight predatory lending and unfair practices in the credit card industry, the administration will offer a stronger framework for consumer and investor protection across the board."
Federal lawmakers are also backing the idea of a new independent consumer protection agency. Last week, Senator Christopher Dodd (D-Conn.) released a statement voicing his support for the agency:
“If the financial crisis has proven one thing, it is that protecting the financial well-being of American consumers should be our first priority as we work to bring our financial regulatory structure into the 21st Century. I am committed to making this agency the centerpiece of my efforts as I work with President Obama and my colleagues to rebuild our financial architecture from the bottom up.”
The Wall Street Journal points out that (not surprisingly) banking groups oppose the idea, and even those who are in favor of the new agency have some kinks to work out: "Proponents have not settled on what form the new agency would take or which financial products it would oversee - issues that could set off turf battles with existing regulators."