Dodd and Corker may sidestep gridlock, give consumer power to Fed

Sens. Chris Dodd (D-Conn.) and Bob Corker (R-Tenn.) are in talks about creating a new consumer financial protection office in the Federal Reserve to attempt to overcome the partisan gridlock that is holding up a wide-ranging financial overhaul plan.

Several sources familiar with the talks said that the two senators have not yet inked a final deal and that they are still working through final language.

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"Dodd is keeping members informed on how things are progressing. We do not have an agreement yet. He hopes to have a consensus bill in the coming days," said Kirstin Brost, spokeswoman for Dodd, chairman of the Senate Banking Committee.
The discussions come as lawmakers continue to criticize the Fed heavily for regulatory lapses in the run-up to the financial crisis.

It's unclear if such a proposal would garner broad support from Democrats and Republicans, but it could represent a breakthrough on the thorniest aspect of the overhaul plan.

President Barack Obama proposed a standalone Consumer Financial Protection Agency (CFPA) to regulate home loans and credit cards, but Republicans and some centrist Democrats have been opposed to the proposal. The House passed legislation in December in support of a standalone CFPA, but action in the Senate has been bogged down since the middle of last year.

The financial industry has lobbied heavily against the idea.

Consumer advocacy organizations have been pressing lawmakers to craft a strong independent consumer agency. They opposed an earlier proposal to create a consumer protection bureau at the Treasury Department.

Asked about the possibility of a consumer protection office at the Fed, an administration official said on Monday night: "The president is strongly committed to an effective and independent consumer agency, with real accountability for setting and enforcing clear rules of the road in the financial services marketplace."