US consumer financial protection flawed-Treasury

WASHINGTON, July 14 (Reuters) - The current U.S. system of consumer financial protection is "designed to fail" and needs replacment with a dedicated new agency that can respond more quickly to emerging problems in the fiancial sector, a senior U.S. Treasury offical said on Tuesday.

Michael Barr, the Treasury's assistant secretary for financial institution, told lawmakers the current system, with consumer protection fragmented among several competing regulatory bodies, welcomes "bad actors" and irresponsible practices, dragging down standards.

"The present system of consumer protection regulation is not designed to be independent or accountable, effective, or balanced. It is designed to fail," Barr said in prepared testimony to the U.S. Senate Banking Committee. "It is simply incapable of earning and keeping the trust of responsible consumers and providers." (Reporting by David Lawder; Editing by Theodore d'Afflisio)