Democrats, Republicans spar over role of the consumer protection agency

Republican Sen. Bob Corker (R-Tenn.) called Dodd's plan "a vast, vast overreach" that would give rule making and enforcement power on financial transactions to one person without Congressional or any other "checks and balances" because it receives its funding directly from the Fed. 

He also said it would end the national banking system by placing state-by-state regulations on smaller banks. 

Florists, dentists and car dealerships would "fall within the regulatory framework" of Dodd's agency and in turn it "would create a massive new bureaucracy with unprecedented powers to regulate small business and consumers," who had nothing to do with the financial crisis, Shelby said. 

Regulators need to ensure that consumers have the information they need to make their own decisions based on their needs and circumstances instead of letting regulators influence their intentions to change their behavior so they make decisions "that the regulator deems appropriate for them," Shelby said.  

The more Shelby looks at the Republican alternative is seems to make "more sense and strikes the right balance."

Meanwhile, Dodd called the Republican proposal "unacceptable" because it relies on the "same regulators who screwed up the country in the first place." He said is also reduces the ability of regulators to stop improper behavior by firms, raises taxes on community banks and credit unions to "pay for regulation that won't even happen," makes it easier to sell borrowers mortgages they can't afford and eliminates provisions that would protect potential homeowners from discrimination. 

"This crisis started with a failure of consumer protection and if the right solution is less consumer protection, this is exactly what the Republican amendment does," Dodd said. 

"The amendment is doing it all wrong."