Liberals wary of Federal Reserve role in consumer protection office

A compromise plan to create a consumer financial protection office at the Federal Reserve suffered a tough liberal backlash Tuesday.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Sen. Bob CorkerBob CorkerOvernight Tech: FCC won't fine Colbert over Trump joke | Trump budget slashes science funding | Net neutrality comment period opens Clinton administration official knocks 'soap opera' of Trump White House Trump's steps on Iran show cooperation with Congress is possible MORE (R-Tenn.) are trying to strike a bipartisan deal on financial overhaul legislation that has been held up primarily over disagreements on how to boost consumer financial protections.

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As a compromise, they have discussed creating a consumer protection office at the central bank instead of a standalone regulatory agency, as originally proposed by President Barack ObamaBarack ObamaWhite House, ethics office feud escalates EPA chief jabs California’s environment push Trump praised Philippines' Duterte for 'unbelievable job' on drugs: reports MORE.

The administration has not ruled out this option, but the compromise is proving to be a tough sell to the Democratic base.

“It’s a horrible idea. It’s a terrible idea,” Sen. Byron Dorgan (D-N.D.) told The Hill. “I don’t support it and I’ll try to change it.”

Sen. Bernie SandersBernie SandersTrump, Clinton campaign aides launch their own bids Overnight Regulation: Biz groups push to scrap rule on reporting employee pay | GOP skeptical of Trump paid leave plan GOP skeptical of Trump plan for paid parental leave MORE (I-Vt.), a vocal critic of the Fed, said the central bank has a poor track record of protecting consumers, particularly in the run-up to the financial crisis.

“Consumers need real, real, real protection,” Sanders said. 

Senate Majority Whip Dick DurbinDick DurbinThe GOP must fight against the Durbin amendment's price controls It’s time to rethink prisoner re-entry Congress urges Trump administration to release public transit funding MORE (D-Ill.) did not rule out the idea, but said it is a “very good question” why lawmakers should give the Fed more power over consumer protections.

Outside consumer advocacy groups that have been pushing for the administration’s proposal for a Consumer Financial Protection Agency (CFPA) said the Fed is a poor choice at which to locate a consumer protection regulator.

“Granting the Fed consumer protection authority would create a lapdog for Wall Street, not the watchdog consumers need,” said Carmen Balber of Consumer Watchdog.

Other Democrats, including Sens. Charles SchumerCharles SchumerCongress urges Trump administration to release public transit funding Overnight Tech: FCC begins rolling back net neutrality | Sinclair deal puts heat on regulators | China blames US for 'Wanna Cry' attack Sasse dominates Twitter with Schumer photo, 'reefer' caption MORE (N.Y.), Sherrod BrownSherrod BrownOvernight Finance: Trump moves to begin NAFTA talks | Dems press Treasury chief on taxes, Dodd-Frank | Biz leaders want tax changes to be permanent Mnuchin mum as Dems press for answers on tax reform, Dodd-Frank Sherrod Brown looks to defy Trump trend in Ohio MORE (Ohio) and Jeff MerkleyJeff MerkleyRussia probes in limbo after special prosecutor announcement Special counsel appointment gets bipartisan praise Lawmakers unveil bill to combat Sessions' push for tougher sentences MORE (Ore.), said they had concerns about the proposal, but they did not oppose it outright.

“I have significant reservations if it does not have independence, and I prefer it to be standalone,” Brown said.

Republican senators on Tuesday appeared cautiously open to the possibility, and said they were concerned less about where the office would be located than with limiting its power and scope to write and enforce rules over the industry.