Last week, I started checking with Senate Banking Committee Democrats to see where they stand on a Consumer Financial Protection Agency, one of -- though certainly not the only -- key sticking points in financial-reform negotiations between Chair Chris Dodd and Republican Sen. Bob Corker. I heard from eight of the committee's 13 senators on the issue. Now, I've heard back from four more. Here's the current breakdown: There are probably only six votes for an independent CFPA on the Senate Banking Committee; six others declined to comment or to support an independent agency. Dodd's office, still negotiating, hasn't taken a firm public position yet.
This is why Sen. Jack Reed, the third-ranking member on the committee, has announced his plan to demand a vote for the CFPA on the Senate floor: Democrats can only afford to lose one vote in committee thanks to unified Republican opposition to the measure, and without substantial lobbying from the White House and leadership from Dodd -- neither of which has yet materialized -- the best hope of a strong consumer regulator will come from the broader Democratic caucus. By its nature, the Banking Committee tends to attract a more conservative membership, but assuming Republican don't filibuster the financial overhaul, reformers can probably scrape up a majority to support real consumer protection.
Here are some of the latest statements:
- Sen. Jon Tester of Montana is waiting to see a final draft of the legislation but issued this statement in the meantime:
"Our economy almost collapsed a year ago because there were no referees on Wall Street. I support putting the refs back on Wall Street, but I’m concerned about the idea of creating a new stand alone agency and the red tape it would create for Montana’s community banks and credit unions."
Tester did help write the Credit CARD act that cracked down on consumer abuses, but this statement is disingenuous: It's essentially a given that small banks will be exempt from inspection by an independent consumer agency, a compromise that was part of the House legislation and is unlikely to be reversed. Additionally, the CFPA actually eliminates red tape by consolidating seven different offices and 17 different pieces of legislation.
- Sen. Evan Bayh of Indiana told the Washington Post that putting consumer financial protection in the Fed is "the best hope of actually getting something done."
- Sen. Daniel Akaka of Hawaii declined to comment while negotiations are underway.
- And finally, Sen. Herb Kohl of Wisconsin has not yet discussed the issue with his staff, but I'm hoping to hear from his office in the next few days with a more definitive picture of where he stands.
-- Tim Fernholz
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