Senators Closer to Deal on Protection

Financial Times
March 11, 2010
Braithwaite, Tom

The issue of consumer protection reportedly was approaching resolution in the Senate Banking Committee on March 10. The latest plan would place a consumer protection agency, headed by an independent chairman, in the Treasury Department; while a special council would be tasked with writing rules designed to prevent the mis-selling of such products as mortgages. The new structure builds on an amendment introduced in the U.S. House by Rep. Walt Minnick (D-Idaho) that was defeated by a narrow margin after lawmakers were lobbied by the Obama administration to reject it. Although it was killed in the House, Minnick's plan could prove acceptable to senior Congressional Democrats anxious to push the reform legislation through; and Minnick himself will meet March 11 with representatives of key lawmakers Sen. Chris Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.). To counter concerns that the Senate Banking Committee, headed by Dodd, could exclude payday lenders and other high-cost, non-credit lenders, senators were looking into a mechanism to cover the industry if it drew complaints. Under it, a consumer hotline would be established for the public to complain about payday lenders, which can levy annual interest in the triple digits; and if payday lending drew enough grievances, the special council of regulators would vote on whether the sector should be subjected to the consumer protection regulations after all.
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