How the announcement of Senate Banking Committee Chair Senator Christopher Dodd's retirement is affecting the financial reform process is still playing out in Washington. One effect is the pressure on a key element of the reform, the proposed Consumer Financial Protection Agency.
On Saturday, the Washington Post reported that Senator Dodd is considering dropping plans for an autonomous agency responsible for protecting consumers against industry abuse in credit cards, mortgages and other aspects of lending and simply assigning the powers to another agency. Some think this suggested compromise will aid Dodd in securing the bi-partisan support he needs to pass the legislation as a whole, a key part of any legacy he will leave behind.
However, according to a report by the Huffington Post, the White House is not yet ready to give up on the idea of an independent CFPA. The Administration feels that one agency with concentrated power would be more effective than when competing multiple agencies have partial responsibility for oversight. "The president has always said he thought a consumer authority was important, that there is a tendency when it is spread over seven different agencies at it is now...that it can fall by the wayside, as you saw in past years," Austan Goolsbee, a member of the president's Council of Economic Advisers, told the Post. Some experts on the more progressive end of the spectrum might almost prefer that proposed CFPA be left out of legislation altogether, than to compromise on an Agency without any real power.
As the health care debate winds down, look for more discussion and focus from both the legislative and executive branches on the details of the financial regulation legislation, especially regarding the fate of an autonomous CFPA.