US Treasury Secretary Timothy Geithner said the administration would not accept a bill overhauling financial regulations that does not contain strong protection for US consumers.
Treasury issued a statement after Geithner met with about 30 representatives of consumer organizations on Wednesday stressing the importance the administration placed on getting Congress to upgrade consumer protection in any overhaul legislation it passes.
“Strengthening consumer protection remains a central objective of our financial reform efforts,” the Treasury said in its statement reviewing what Geithner told the consumer groups.
“To us … that means a dedicated authority with the independence and capacity it needs to be accountable,” Treasury said in describing the type of financial protection agency it was seeking.
However, the Treasury statement did not say whether the administration was still insisting on a stand-alone agency, a position that is meeting strong resistance from financial groups.
The overhaul plan the administration put forward last year called for a freestanding Consumer Financial Protection Agency. The legislation that passed the House of Representatives included such an agency although many industry groups are opposed, saying a freestanding consumer agency would subject financial institutions to another layer of regulation outside of the current banking agencies to police safety and soundness issues.
Senate Banking Committee Chairman Christopher Dodd, a Democrat, and Senator Bob Corker, a Republican, are trying to craft a compromise Senate bill. One proposal being considered would house the consumer agency inside the US Federal Reserve. Other suggestions have been to put the consumer agency inside the Treasury Department or the Federal Deposit Insurance Agency.
House Financial Services Committee Chairman Barney Frank called the proposal to put the consumer agency inside the Fed “a joke.”
Many consumer groups believe the central bank did a poor job in protecting consumers in the lead up to the financial crisis.
The Treasury statement said the administration wanted the consumer authority to have independent leadership appointed by the president and confirmed by the Senate with an independent budget.
The administration said the consumer authority should also have the ability to set clear rules governing consumer financial services and to enforce those rules.
“This approach will strengthen consumer choice and innovation and reinforce, rather than undermine safety and soundness,” the Treasury said in its statement.
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