Associated Press
WASHINGTON -- Getting new regulations to govern Wall Street boils down to this: If everybody hates a compromise, can it still work as a deal?
Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, and Sen. Bob Corker, R-Tenn., a Republican member of the committee, thought they had the makings of a bipartisan solution with a plan to place a beefed up consumer watchdog entity inside the Federal Reserve.
It wasn't what President Barack Obama initially wanted. He had called for a freestanding Consumer Financial Protection Agency.
It wasn't what the banks wanted. They wanted existing bank regulators to handle consumer protections.
But the Fed-housed consumer agency -- an idea proposed by Corker -- met little support Tuesday among Banking Committee Democrats or Republicans, or among two natural foes -- business groups and consumer advocates.
How new regulations on financial institutions treat consumer protections has become the pivotal issue for a top Obama legislative priority. As a political test of Democrats and their ability to govern, getting a tough new regulatory regime aimed at preventing a recurrence of the 2008 financial crisis stands second only to health care.
Under the plan to place consumer financial protection oversight exclusively in the Fed, the new entity would have its own president-appointed head, and it would have autonomous power to set consumer protection regulations. Before enacting rules, however, it would have to consult with bank regulators.
Those details remained in flux as Dodd and Corker continued to seek support. Both voiced optimism on Tuesday, even though aides said hopes of having a bill ready this week were slipping.
