Senators want a new agency to head off financial fraud

WASHINGTON - Senators Richard Durbin of Illinois and Charles Schumer of New York want to create an oversight agency to help consumers obtain financial products such as mortgages, credit cards, and retirement savings accounts without "hidden dangers or unreasonable tricks."

The Financial Product Safety Commission proposed by the two Democrats would be modeled after the Consumer Product Safety Commission, which regulates goods ranging from toys to all-terrain vehicles.

"It's time to put the needs of American families above the interests of Wall Street," Durbin said. "When American consumers decide to sign up for mortgages, with a mountain of fine print, many times they don't have a clue what's included inside. And it can be explosive not just for the borrower but for America's economy."

The agency would act quickly on predatory practices, Durbin said, while ensuring companies are held accountable.

Critics of current regulation such as Elizabeth Warren, a Harvard law school professor and member of the panel overseeing Congress's $700 billion bailout of the financial industry, and the Consumer Federation of America say federal agencies sometimes overlook products that are harmful to consumers because they're focused on the safety and soundness of individual companies.

A new agency would fill the regulatory gap, Warren said. Regulations have "moved consistently in one direction - against the family," she said.

The legislation is supported by Representative William Delahunt, a Massachusetts Democrat, and more than 55 consumer groups and labor unions.