WASHINGTON, March 4 (Reuters) - Christopher Dodd, the chief negotiator for U.S. Senate Democrats in talks on a bipartisan financial reform bill, told Bloomberg TV on Thursday he has not settled on putting a new consumer watchdog in the Federal Reserve.
Dodd said lawmakers have not yet struck a deal on compromise legislation, but he was hopeful they would in the days ahead.
He said he planned to brief fellow Democrats on the status of negotiations on Thursday.
The powers of the consumer watchdog are more important than its location in the federal government, he said.
“We’re talking about an agency ... that has the autonomous ability to craft rules and to be directly involved in the enforcement of those rules. Now where that’s located is less relevant,” Dodd said.
President Barack Obama’s proposal last year to create an independent Consumer Financial Protection Agency (CFPA) for weeks has been the main impediment to a Senate compromise.
Dodd is trying to formulate an approach to win the support of Republicans who oppose making the CFPA an independent agency, but could live with it as a unit of another agency.
Sources told Reuters on Wednesday that Senator Richard Shelby, the banking committee’s top Republican, was open to possibly putting the CFPA inside the Fed.
Wherever the watchdog ends up, it would be designed to regulate mortgages, credit cards and other consumer financial products, and to consolidate consumer protection duties that are now scattered across several agencies, including the Fed.
Dodd in November called the Fed’s record on consumer protection over many years “an abysmal failure.” But he suggested in the Bloomberg interview that things have changed.
“While I haven’t settled on the Fed as a place for this to be, there’s a vast difference between what’s being suggested today and what existed for so many years and where there was so much disappointment in how that operation was run,” he said.
He also said regulators have “got to” have powers to enforce the kinds of barriers against proprietary trading by banks that are suggested by the “Volcker rule,” another Obama proposal, if not the exact rule itself.
“If someone is involved in proprietary trading and they’re also getting an implicit or explicit guarantee of taxpayer money if they fail, I mean, the answer’s pretty obvious.
“But that’s not a job for us to write, in my view. ... I can’t write regulations. ... That’s why we have talented, good people in these agencies to do that and then quickly report back to Congress,” Dodd said. (Editing by Leslie Adler)
Our Standards: The Thomson Reuters Trust Principles.