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Treasury Chief Argues for New Agency

By ANNE FLAHERTY

posted: 110 DAYS 17 HOURS AGO

comments: 24

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WASHINGTON (July 24) - Treasury Secretary Timothy Geithner said Friday that a new agency focused on protecting consumers is needed because the mission currently is too scattered among various regulators.

This results in "finger-pointing in place of action," he told the House Financial Services Committee.

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The administration's plan to create a Consumer Financial Protection Agency has bumped up against opposition from Republicans, industry and federal regulators.

Federal Reserve Chairman Ben Bernanke has argued that the Fed is best suited for the role.

Monitoring risk and protecting consumers are "closely related, and thus entail both informational advantages and resource savings," Bernanke said in prepared testimony.

Geithner chalked up the pushback to federal regulators wanting to protect their turf.

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"With great respect to the chairman and other supervisors who are reluctant to do this, they are doing what they should, which is defend the traditional prerogatives of their agencies," Geithner said. "I think frankly all arguments should be viewed through that prism."

Rep. Ron Paul of Texas and other Republicans on the panel said it was foolish to give "unelected bureaucrats" the authority to determine what financial products are fair.

"They will be empowered to decide which credit cards we can receive, which home mortgages we are permitted to possess, and even whether we can access an ATM machine," he said.

Rep. Barney Frank, the panel's Democratic chairman from Massachusetts, said Republicans aren't being practical. Frank supports the creation of the agency but has delayed a vote on it until after the August recess to give critics a chance to weigh in.

"Ideology shouldn't be driving this," he said.

Bernanke's push back comes as he's nearing the end of his term. After it expires early next year, President Barack Obama will have to decide whether to reappoint him. Bernanke, an appointee of President George W. Bush, took over the Fed in February 2006.

The proposal to create a consumer protection agency is part of a broader overhaul of the nation's financial rules. The agency would monitor the fine print on such products as credit cards and mortgages. Such oversight is now scattered among the Fed and other agencies.

House Republicans have offered an alternative. Their bill would strip the Fed of its regulatory role and abolish the Office of the Comptroller of the Currency and the Office of Thrift Supervision. In their place would be a single regulator for depository institutions, which would include an office focused on consumer protections.

The Obama administration counters that its proposed agency could monitor nonbank institutions too, ensuring there aren't any gaps in oversight.

The administration's plan also would tap the Fed to be the regulator of huge, globally interconnected financial companies whose collapse could endanger the entire U.S. financial system and the broader economy.

Both Democrats and Republicans on Capitol Hill are leery of giving the Fed additional powers when they think its regulatory oversight of banks and risky mortgages led to the current financial crisis.

Associated Press writer Jeannine Aversa contributed to this report.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-07-24 14:56:29

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Glenler

01:15 PMJul 24 2009

Hey changewebelieve read the Bible Lots of death and killing there!! What a donk!

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Fltz24

04:40 PMJul 10 2009

Do you ever wonder where the jobs went as you drive down to wal mart in your oriental car? Don't fight universal healthcare or communism while supporting them with your purchases. An overpaid UAW woker put 100% of his wage back into the US economy. The steel industry, trucking shipping and the small business owners are all suffering from the faux patriots sporting a "Support our troops" sticker on their asian ride. You suck

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RWalb33785

02:58 PMJul 10 2009

More BIG government. What a surprise!!! The last person who should be involved with the Fed is Turbo Timmy. The Fed is independent and should stay independent. If the government wants to give them more power, they must audit them first!

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Lghtning38

02:50 PMJul 10 2009

stimulus is working gaitherner says, as his nose grows another foot

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AnCWalton

05:25 PMJun 18 2009

AOL --limiting number of posts now --if so tell us don't simply block our coding in.

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AnCWalton

05:19 PMJun 18 2009

AOL might want to get the code valisdation glitches fixed--or we can all leave AOL and go to issue related blogs.

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AnCWalton

05:04 PMJun 18 2009

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AnCWalton

05:01 PMJun 18 2009

Butte---You army guys were always nitwits..Takes Marines to get it...If you read my post I said let's go back to the regs set up in the Depresssion and re intro them..as a starting point.

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AnCWalton

04:58 PMJun 18 2009

Where are the AOL tech people ? These posting sites are going crazy...THey keep deleting posts---or is it the Supreme Leader sneaking in here ???

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Butteparts1

04:51 PMJun 18 2009

ANCWALTON-I too am retired 23 years US Army. Unlike you I do not feel the need to have my life run by a bunch of left wingnuts. I have no problem with REGULATION as you seem to belive- it is needed but just to have regulations for the sake of having them means nothing if they are not enforced! The FEDERAL RESERVE IS NOT FEDERAL- - - What part of that do you not understand!- - - it is private and answers to nobody!- - - They print any amount of $$$$ with NO OVERSIGHT and you want them to run regulations! You gotta be quite out of your mind to believe they can do this without owning our REBUBLIC. Course if you are a tried and true LIBERAL you just want the Government to take care of your entire life anyway- - leave the rest of us alone that know how to live independantly of your "I am from the Govt and I am here to help!"

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