Is the Senate Bungling Its Wall Street Crackdown?

The last thing Democrats want is for Congress' long-promised Wall Street crackdown to become a rerun of health care reform. That is, the House passes a bill, only to see grueling negotiations grind to a halt in the Senate, as health care legislation did last fall. But as Sen. Chris Dodd (D-Conn.), chair of the Senate banking committee, prepares to release his proposal for financial reform this week, House lawmakers who have worked on the issue tell Mother Jones they're worried that the talks will once again paralyze the Senate and produce only flimsy restrictions on financial firms.

Exhibit A for these anxious House lawmakers is the battle for a Consumer Financial Protection Agency, arguably the lifeblood of any financial overhaul. The CFPA, to borrow an analogy, would protect consumers from subprime mortgages and unfair credit card policies in much the same way as the Consumer Product Safety Commission scrutinizes faulty toasters and dangerous toys. It's an essential piece of the puzzle that experts say would rein in the predatory practices and disastrous products that toppled the housing industry and dragged the economy down with it.

In December, the House's major financial reform bill featured such a stand-alone consumer protection agency. But in the Senate, the CFPA has run into serious trouble. Senators like Richard Shelby (R-Ala.), the banking committee's ranking Republican, and other GOP colleagues have sought to neuter or outright kill the proposal for an independent body, suggesting that a consumer agency could instead be folded into an existing department, like the Treasury. Even Dodd, who's led the Senate's negotiations for months, had expressed doubt earlier this year whether a CFPA could make it into the final legislation. And now that Shelby has reportedly rejoined the Senate's main talks, the fate of an independent CFPA is even further in doubt. So contentious is the CFPA that it's been cast lately as financial reform's "public option," threatening to derail the entire bill.

via motherjones.com

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