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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 CorkerRobert (Bob) Phillips CorkerCongress punts fight over Dreamers to March Drama surrounding Shulkin — what is the future of VA health care? Blackburn pushes back on potential Corker bid: 'I'm going to win' 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 Hussein ObamaOvernight Energy: Dems ask Pruitt to justify first-class travel | Obama EPA chief says reg rollback won't stand | Ex-adviser expects Trump to eventually rejoin Paris accord Overnight Regulation: Trump to take steps to ban bump stocks | Trump eases rules on insurance sold outside of ObamaCare | FCC to officially rescind net neutrality Thursday | Obama EPA chief: Reg rollback won't stand Ex-US ambassador: Mueller is the one who is tough on Russia 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 SandersBernard (Bernie) SandersDems ponder gender politics of 2020 nominee 2020 Dem contenders travel to key primary states After Florida school shooting, vows for change but no clear path forward 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 DurbinRichard (Dick) Joseph DurbinAmerica’s waning commitment to the promise of the First Amendment Senate rejects Trump immigration plan What to watch for in the Senate immigration votes 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 (Chuck) Ellis SchumerDemocrats now attack internet rules they once embraced Schumer: Trump budget would ‘cripple’ gun background checks Schumer: Senate Republicans' silence 'deafening' on guns, Russia MORE (N.Y.), Sherrod BrownSherrod Campbell BrownLawmaker interest in NAFTA intensifies amid Trump moves Dem senator shares photo praising LeBron James after Laura Ingraham attacks Trump gets recommendation for steep curbs on imported steel, risking trade war MORE (Ohio) and Jeff MerkleyJeffrey (Jeff) Alan MerkleyGrassley, Dems step up battle over judicial nominees 2020 Dem contenders travel to key primary states Mulvaney remarks on Trump budget plan spark confusion 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.