Treasury, Fed Tussle over Agency; Consumer Protection Spurs Fight for Control
Byline: Sean Lengell, THE WASHINGTON TIMES
The Treasury Department and the Federal Reserve continued their public squabble Friday over a proposed consumer protection agency.
Treasury Secretary Timothy F. Geithner told the House Financial Services Committee that the Obama administration's plan for moving consumer protection duties from the Fed and other regulators to a new independent agency is needed to prevent a repeat of last year's near meltdown of Wall Street.
Our patchwork, antiquated, Balkanized, segmented structure of oversight responsibility created large gaps in coverage, allowing institutions to shop for the weakest regulator, Mr. Geithner said.
The administration says its proposed Consumer Financial Protection Agency would offer greater consumer protections for such financial products as mortgages, credit cards and loans by establishing simpler and more transparent rules and regulations.
But Federal Reserve Chairman Ben S. Bernanke, in prepared remarks submitted to the committee, repeated statements he made earlier this week that stripping his agency of consumer regulatory powers could hurt the economy because risk assessment and compliance monitoring of consumer and prudential regulations are closely related.
Mr. Bernanke said that during his tenure at the Fed the agency has adopted strong consumer protection measures in the mortgage and credit card industries, and that those new regulations benefited from the supervisory and research capabilities of the Federal Reserve.
The Fed has been criticized for failing to rein in aggressive mortgage lenders during the recent housing bubble. …