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Dodd may sacrifice consumer agency to pass reform bill

WASHINGTON — Senate banking committee Chairman Chris Dodd has discussed jettisoning plans for a standalone Consumer Financial Protection Agency, as part of an effort to secure bipartisan support for legislation to reform financial regulation, people familiar with the matter told the Washington Post.

One possibility raised during talks between Dodd's staff and Republican counterparts would be to assign new consumer protection powers to another agency. Such a compromise might offer an opportunity for Dodd, D-Conn., to preserve the goal of expanding safeguards while appeasing Republicans who have chafed at any suggestion of a new agency.

In June, President Barack Obama proposed the creation of an agency to protect consumers against abuses in mortgages, credit cards and other forms of lending.

People on both sides have said the negotiations remain in the early stages. Though Dodd and the committee's ranking Republican, Sen. Richard Shelby, R-Ala., said in December that they hoped to reach a deal on a broader package of financial reforms by the time the Senate reconvened in January, no final agreement is in sight, the sources told the Washington Post. They spoke on condition of anonymity because of the sensitivity of the subject.

Dodd already has proposed stripping the Federal Reserve of all regulatory responsibilities, rejecting an administration proposal to expand the Fed's role. Such a concession on consumer protection also would differ from a bill passed recently by the House, which included the creation of a consumer regulator.

But Dodd, who announced this month he would not seek re-election in the fall, is eager to complete a bill and leave a lasting stamp on a landmark piece of financial regulation. A compromise on consumer protection might increase the chances of passing a sweeping reform package, which includes measures to oversee financial derivatives, instill safeguards against systemic risks and streamline banking regulation.

Obama is confident tax on banks will pass

President Barack Obama expressed confidence Saturday that lawmakers would approve his proposed tax on banks to recover bailout money, despite opposition from Republicans and the financial industry.

"Like clockwork, the banks and politicians who curry their favor are already trying to stop this fee from going into effect," he said, using his weekly radio and Internet addresses to promote the plan he announced last week.

"The very same firms reaping billions of dollars in profits, and reportedly handing out more money in bonuses and compensation than ever before in history, are now pleading poverty. It's a sight to see."

"We're not going to let Wall Street take the money and run. We're going to pass this fee into law," he said.

Congress must approve the tax and that's not assured, given the immediate opposition from Republicans.

The proposed 0.15 percent tax would last at least 10 years and generate about $90 billion over the decade, according to administration estimates. It would apply to about 50 of the biggest banks, those with more than $50 billion in assets, and include many institutions that accepted no money from the $700 financial industry bailout.

Six of the biggest U.S. banks are on track to pay $150 billion in total executive compensation for 2009, slightly less than the record $164 billion in 2007 before the financial crisis struck, according to the New York state Comptroller's Office.

Dodd may sacrifice consumer agency to pass reform bill 01/16/10 [Last modified: Saturday, January 16, 2010 8:55pm]
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