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Sunday, February 28, 2010

Dodd Scraps Obama’s Consumer Agency, Proposes Treasury Bureau

February 28, 2010, 12:02 AM EST
By Alison Vekshin and Robert Schmidt

Feb. 28 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd abandoned the Obama administration’s stand- alone consumer financial agency and is proposing a bureau in the Treasury Department, seeking to overcome Republican opposition to legislation overhauling Wall Street regulations.

The Bureau of Financial Protection would be run by a director appointed by the president, have power to write rules for companies offering financial services and be funded mainly through industry fees, according to a two-page summary the Connecticut Democrat circulated this weekend.

“It is one of several proposals he has advanced to seek a bipartisan consensus and enhance consumer protection,” Dodd spokeswoman Kirstin Brost said yesterday in an e-mail. “We do not have an agreement.”

Dodd’s plan is aimed at breaking a deadlock with committee Republicans, who oppose the independent Consumer Financial Protection Agency sought by President Barack Obama in his June financial regulations proposal. The disagreement has stalled Senate negotiations on the overall financial regulatory bill.

Dodd, in a Feb. 26 Bloomberg Television interview, said negotiators were “close” to a deal on the legislation and declined to set a date for releasing the measure. Senator Bob Corker, a Tennessee Republican, had been negotiating with Dodd on the legislation.

The Treasury bureau would have examination and enforcement authority over large banks and bureau would be funded by fees paid by large banks and non-banks, with the Federal Reserve making up any unions, and non-bank mortgage companies. Banking regulators would retain such power for banks and credit unions with less than $10 billion in assets, according to the proposal.

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