By Kevin Drawbaugh
WASHINGTON (Reuters) – U.S. Treasury Secretary Timothy Geithner argued forcefully on Wednesday for creating a government watchdog for financial consumers, while giving cautious support to paring back its scope.
Amid stiff resistance by banks and Republicans to the proposed Consumer Financial Protection Agency, Geithner told a House of Representatives committee the CFPA is needed to fix failures starkly revealed in the global financial crisis.
"The need for a dedicated, consolidated consumer protection agency is clear. The current consumer protection system failed," he told the House Financial Services Committee.
The CFPA would be a central consumer protection overseer handling laws now vested in several existing agencies, including the Federal Reserve, which have been criticized widely for their past performance.
Committee Chairman Barney Frank said existing regulators' record on consumer protection is "abysmal."
moreBy Kevin Drawbaugh
WASHINGTON (Reuters) – The Congress' chief author of financial regulatory reform moved on Tuesday to kill the most controversial part of an Obama administration proposal for a new government watchdog for financial consumers.
Banks would not be required to offer so-called "plain vanilla" versions of financial products, such as mortgages, under draft legislative language drawn up by Democratic Representative Barney Frank and obtained by Reuters.
The draft language comes in the face of opposition among businesses and existing regulators to President Barack Obama's proposed Consumer Financial Protection Agency (CFPA), part of his sweeping program to tighten bank and market regulation.
In opting to delete the "plain vanilla" provision from his version of the proposal, Frank, who chairs the House of Representatives Financial Services Committee, has effectively acknowledged that it was an over-reach by the administration.
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