The Senate passed its financial reform bill yesterday with Sen. Chris Dodd’s consumer protection bureau intact. The contours of the debate over policing the products financial players push on communities didn’t change over the course of the drawn out fight. Here’s the take home: The House and Senate versions must now be reconciled, and there’s reasonable hope that a stronger watchdog will emerge. Back in March, Dodd laid out a compromise to appease Republicans (primarily Tennessee’s Bob Corker, it seems, who didn’t vote for the bill) that left many community watchdogs wanting more. That compromise held in the bill passed last night. It creates a consumer financial protection bureau inside the Federal Reserve. The bureau would get a presidentially appointed chief, its own budget and broad power to write and enforce rules governing financial products ranging from mortgages to pay day lending. An amendment to the bill passed this week that also would allow states to enforce more stringent rules than those set by the feds. And Kansas Republican Sam Brownback’s effort to carve out auto dealers–who initiate a large share of loans in Black neighborhoods–never made it to a vote. The primary complaint about the Senate’s consumer protection bureau, however, is that its not actually independent. By housing it inside the Fed and giving veto power to an oversight board stacked with banking regulators, the bill sets the bureau up for failure.
The Road Forward for Protecting Communities from Shady Lending
By Kai Wright May 21, 2010