WASHINGTON US Representative Barney Frank said that if Senator Chris Dodd moves forward with a new Senate compromise proposal -- which would place new consumer financial protections within the Federal Reserve -- Frank would block the legislation from passing the House.
Frank said that he has the support of the Democratic House leadership to stop the idea, which is taking shape in Dodd's Senate Banking Committee.
It's crazy to have it in the Fed, Frank said of a consumer protection agency. The story of the Fed is it's undemocratic, arrogant, elitist and it doesn't care about Americans. So let's give it consumer affairs it's almost like a bad joke.
Frank and Elizabeth Warren, chair of the TARP Congressional Oversight Panel, were two of the architects behind the Consumer Financial Protection Agency, an independent watchdog on financial issues that was the centerpiece of President Obama's regulatory plan and Frank's sweeping reform bill that passed the House in December.
But they said in interviews this week that they find the latest Senate proposal unacceptable, due to concerns with the agency's ability to function independently while housed in the Fed, the central US banking system.
Warren, who is also a Harvard law professor, said the last thing she wants is for Congress to create some mush-mouth meaningless bureaucracy that permits everyone in Congress to pat themselves on the back that they pretended to help families.
Dodd's spokeswoman Kirstin Brost said the senator is less concerned about where a consumer protection watchdog is housed than what powers that entity has to carry out its mission.
Frank said he could live with the agency in the Treasury, provided it had an independent director and funding source, as well as rule-making power. But placing it under the Federal Reserve's jurisdiction would make the agency a second- or third-class regulator, he said.
It's about time the Senate stop playing games, Frank said. If Republicans and conservative Democrats want to kill the bill, then make them do it, make them filibuster. I'm not going accept some deal in the name of bipartisanship that totally weakens the agency.
Dodd's original bill, introduced in November, also created an independent agency like Frank's, but Dodd has since shifted away from that model after facing fierce resistance from Republicans and the banking lobby.
Dodd started negotiating with Senator Richard Shelby, the ranking Republican on the Senate Banking Committee, to find a compromise. After an impasse last month, Dodd began talking instead with Senator Robert Corker, a first-term senator on the Banking Committee.
In the past week, multiple proposals have been floated, including one idea to place the consumer agency within the Treasury Department and reduce the Fed's power. Dodd and Corker have yet to finalize all the details of the bill, which Dodd hopes to release sometime next week, Brost said.
About Political Intelligence
Glen Johnson is Politics Editor at boston.com and lead blogger for "Political Intelligence." He moved to Massachusetts in the fourth grade, and has covered local, state, and national politics for over 25 years. E-mail him at email@example.com. Follow him on Twitter @globeglen.