Feb 07, 2010

"Overlooked amid Bank of America's fight with Andrew Cuomo last week was a development that may have a bigger impact on bank customers in the long run: the potential collapse of an effort to protect consumers.

The Senate Banking Committee has been trying to produce a bipartisan overhaul of financial regulations. That effort hit a major stumbling block Friday, when Chairman Christopher Dodd announced he was at an impasse with Republican Sen. Richard Shelby over one of the reform's most fundamental provisions. Shelby opposes the creation of a Consumer Financial Protection Agency, which would be a new outfit dedicated to policing credit cards, mortgages, payday loans and other consumer credit products. His opposition, and Republicans gaining a 41st member in Massachusetts Sen. Scott Brown, will make passage difficult.

The agency, already approved by the House, would be a vital part of financial reform. Bank regulators, by their own admission, failed to adequately carry out their consumer protection duties in the run up to the 2008 financial crisis. It's time to have regulators whose only priority is protecting consumers from such things as hidden fees, predatory lending and dishonest home loans."

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