Democrats and Republicans on the Senate Banking Committee are split over how to boost consumer protections for financial products even if they shelve plans for a new regulator.
The Obama administration, many Senate Democrats and consumer advocacy groups strongly support a new Consumer Financial Protection Agency (CFPA) that would regulate financial products, including home mortgages and credit cards. The full House voted in December in favor of a package of financial regulations that included a new CFPA.
Instead of a separate agency, Dodd and Sen. Richard Shelby (R-Ala.) have discussed a new division for consumer financial protections within a regulator over national banks, several industry sources say. But the two sides are split over how much independence and rule-making power to give to a new division, among other issues.
The differences lie in the division's scope and power to write rules over banks. Democrats have supported strong rule-writing power, while Republicans have generally favored leaving rule-making authority at the existing regulators instead of pooling the powers in the new division.
In addition, industry sources say there is a debate over how much independence the head of the new division would have relative to the head of the actual regulator.
Dodd said again this week that he wants to craft a bipartisan bill, which became more essential after Republicans won the Massachusetts Senate election to claim 41 votes in the upper chamber. Dodd has also criticized the White House this week for proposing new regulations on big banks that he said complicate Senate action on broader financial reform.
"We are getting to the point where we need to pull the trigger, because hard working American families can’t wait much longer for a return to economic security," Dodd said Thursday.