Dodd may scrap consumer protection agency: report

  @ibtimes on January 15 2010 10:32 AM

The head of the Senate Banking Committee may scrap the idea of creating a consumer financial protection agency, the Wall Street Journal said on Friday citing people familiar with the matter.

Such a decision would set back White House efforts to overhaul financial sector regulations.

Sen. Christopher Dodd has discussed abandoning the idea for an agency with key Senate Republicans as a way to secure a bipartisan deal on legislation, the newspaper said, citing the people.

The offer is conditional on the creation of a stronger consumer protection division within another federal agency, the newspaper said, citing the people.

Dodd is a Connecticut Democrat who this month said he will not seek reelection this year.

Representatives of Dodd and Alabama Senator Richard Shelby, the top Republican on the Banking Committee, declined to discuss the talks other than to say there is no agreement yet, the newspaper said.

The consumer protection agency was a central element of a financial industry overhaul that the Obama administration proposed last year.

Many Democrats and consumer groups favor the agency. They say it would help protect consumers from banking practices that are abusive, needless or excessively costly, and shore up oversight that other regulators do not or cannot provide.

Many Republicans, banks and industry groups oppose the agency. They say it would create a bloated bureaucracy and overlapping, conflicting regulatory programs that would result in extra costs for the financial sector, businesses and consumers.

(Reporting by Jonathan Stempel; Editing by Steve Orlofsky)

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