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Re-activateThe Senate begins debate today on comprehensive financial reform, long awaited by citizens and feared by many in the financial industry. Yesterday, Republican Senators released their version of a financial reform bill.
The Minnesota Independent does a good job of comparing and contrasting Democratic and Republican proposals. Here's the Independent's synopsis of differing proposals for a consumer financial protection body, a main component of both parties' plans, and of major interest to consumer organizations such as Consumers Union, publisher of Consumer Reports:
Dodd [Democratic]: The bill creates a Consumer Financial Protection agency paid for by the Fed. It has oversight over banks with assets more than $10 billion, big shadow-banking institutions, any mortgage-related businesses, credit card companies, and payday lenders. It can impose consumer-protection measures.
Republican: The bill creates a Council for Consumer Financial Protection comprising three independent experts, the head of the FDIC, the Comptroller of the currency and the head of the Fed. It has "primary supervision and enforcement authority" over large banks, non-bank mortgage-originators and other entities. Small community banks and thrifts remain overseen by their primary prudential regulators.
Expect to hear lots from Democrats about how much we need stiff regulation and controls to ensure we don't repeat the recent mistakes that nearly led to a second Great Depression. Expect Republicans to warn about the constraints of too much regulation on growing businesses as well as the threat to financial innovation—including credit products for consumers—posed by too much government oversight.—Tobie Stanger
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