Congress Nears Agreement on Wall Street Overhaul
March 3, 2010 -- After the worst economic crisis since the Great Depression, congressional lawmakers are nearing an agreement on how to revamp the U.S. financial system and protect consumers from future problems.
Key members of the Senate Banking Committee, after months of negotiations, are expected to unveil their proposal within the next week, people familiar with the negotiations said. While the sources cautioned that no agreement had been reached, the lawmakers, led by the panel's chairman, Sen. Chris Dodd, D-Conn., are considering a new plan to entrust the Federal Reserve with protecting consumers from abusive financial industry practices.
If the senators can reach an agreement on how to shield consumers from the perils of the financial system, it would signify a massive step in the push to enact the most sweeping regulatory changes on Wall Street since World War II. No single issue in the overhaul effort has caused more controversy than the proposed consumer protection agency.
The White House proposed in June a stand-alone unit and the House of Representatives passed a bill to create one in December, but the proposal has divided the key players in the Senate for months. Lobbyists for the financial industry, as well as numerous Republicans, have fought vigorously against the idea, warning that it would stifle innovation in the financial industry.
The latest proposal to house the consumer protection unit within the Federal Reserve came days after Dodd suggested putting it in the Treasury Department under the name of a "Bureau of Financial Protection."
It remains to be seen what will win the support of Republican senators such as Richard Shelby of Alabama and Bob Corker of Tennessee, but financial industry sources said they expect Dodd's eventual proposal will place the watchdog within another federal regulator, rather than create a new stand-alone agency.
The expected compromise by Democrats and the White House prompted concerns among critics, led by Elizabeth Warren, the head of the Congressional Oversight Panel and a leading voice in calls for an independent consumer watchdog.
"What matters is the independence," Warren said. "If the agency is not independent, there's really not much point."
