Dodd calls for aid to consumers hurt by crisis

Senate Banking Committee Chairman Chris Dodd (D-Conn.) on Tuesday called for a four-part congressional plan to aid consumers affected by the credit crisis and said the chamber could debate it during next month’s lame-duck session. 

Speaking to reporters in the Senate an hour after a private meeting with Treasury Secretary Henry Paulson at the Treasury Department, Dodd called for a package of mortgage assistance, credit card reform, a crackdown on predatory lending and bankruptcy provisions long sought by Senate Democrats.

Dodd said he supports the Bush administration’s bank-investment plan, but believes the consumer measures are just as necessary and overdue.

“These are areas where I think the American consumer can benefit,” Dodd said. “If we’re spending as much time and as much of our resources on the financial sector, it seems to me appropriate that we take steps to provide some relief for the consumer as well.”

Dodd said while most of the ideas have a long and unsuccessful history on Capitol Hill, the recent economic crisis makes it necessary to re-evaluate them. He also said they are necessary because some of the ideas currently exist as rules or regulations that can easily be modified and should be codified into law.

Specifically, he called for legislation that can help homeowners facing foreclosure; more scrutiny of credit card rates and debt loads; reform of lending practices of state- and federally chartered financial institutions; and measures to allow judges greater flexibility to revise mortgage terms for homeowners in bankruptcy proceedings.

Discussions are ongoing with House and Senate leaders to bring the proposals to the Senate floor, either as a separate bill or as part of a larger stimulus package, Dodd said.

Dodd said he pressed Paulson on Tuesday for strict limits on executive compensation at the financial institutions involved in the administration’s investment plan. He said he generally supports the plan because inaction could trigger more stock market drops.        “The steps taken are positive ones and constructive ones,” he said. “While I wouldn’t rely on just the market reaction to determine the success of it, clearly, trying to free up those clogged arteries where credit has not moved at all is the major goal here and this option is more likely to produce the desired results.”