A Republican plan to substitute its own version of a new consumer protection agency into the Wall Street reform bill was voted down Thursday, with two Republicans joining all 59 Democrats to stop the GOP effort.
The bill was voted down 38-61, with Republicans Chuck Grassley of Iowa and Olympia Snowe of Maine siding with the Democrats.
A day after the Senate embraced several amendments with broad bipartisanship, the chamber shifted into a combative posture Thursday as Republicans and Democrats traded charges over which party is looking out for consumers’ interests.
Democrats have proposed an independent consumer bureau within the Federal Reserve to write and enforce regulations on consumer financial products. It would be funded by taxpayers.
The Republican plan would have created an agency within the Federal Deposit Insurance Corp. to write and supervise consumer laws for banks, mortgage providers and other nonbank firms “only if they have a pattern and practice of violating consumer laws,” said Sen. Richard Shelby (R-Ala.), an author of the plan.
Under the plan, the FDIC would need to sign off on the consumer rules, and funding for the division would come from fees assessed on nonbanks.
Unlike the Democratic plan, Republicans would maintain federal pre-emption of state consumer protection laws, which would prevent the financial industry from having to beat back proposals in 50 different states.
President Barack Obama took the rare step Thursday of weighing in on the Republican amendment to the Wall Street reform bill, issuing a statement slamming the GOP proposal on consumer protections as “worse than the status quo.”
Obama stopped short of pledging to veto a bill with weakened consumer protection provisions, but he tiptoed up to the line: “I will not allow amendments like this one written by Wall Street’s lobbyists to pass for reform.”
Later, Deputy Treasury Secretary Neal Wolin took the White House briefing room podium to add his criticism of the GOP alternative, saying, “The Republican amendment will not work.” He also predicted the amendment wouldn’t pass and called talk of a possible veto “premature.”
But the sparring over the GOP plan pitted the two parties against each other over one of the more hotly contested aspects of the bill.
“We’re just trying to make sure consumers have the tools and information to make sensible choices with their financial resources,” said Sen. Jack Reed (D-R.I.). “But unfortunately, it appears the other side of the aisle wants to make it appear they are strengthening consumer protection when they are really doing not much but just enforcing the status quo.
Republican senators cast their plan as a more consumer-friendly, taxpayer-focused approach. They have spent the past week attacking the Democratic plan as a vast overreach of government powers, creating an agency free from congressional supervision and vague new consumer protections that would ensnare Main Street businesses.
“We’re doing this to provide a more rational and constructive alternative to what our Democratic colleagues are trying to slip by the American people,” Shelby said. “It will create a massive new bureaucracy whose power and autonomy has no current equivalent to anywhere in the federal government. It can do whatever it wants, whenever it wants without any supervision or real check on its authority.”
Republicans and some business groups argue that the Democratic plan would regulate any small business that extends credit to customers. Democrats say their proposal applies only to firms in which extending credit makes up a significant portion of their business. Democrats acknowledge that auto dealers and department stores could fall under that umbrella but dispute that other small businesses such as dentists and florists would be affected.
The Society of American Florists was among 11 business groups that signed a letter to the Senate Wednesday supporting the Republican plan.
Obama said he would work with the Republicans, but they needed to negotiate in “good faith.”
“Alternatives that gut consumer protections and do nothing to empower the American people by cracking down on unfair and predatory practices are unacceptable, and I urge the Senate to vote no on weakening consumer protections and instead stand with the American people,” Obama said.
What else would you expect from the GOP? They want to protect their Paymaster$.
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