WASHINGTON, Feb 12 (Reuters) – A fight over how sharp to make the teeth of a new U.S. watchdog for financial consumers threatened on Friday to derail progress toward tighter bank and capital market regulation, amid much posturing on both sides.
Democrats want an independent agency that can clamp down hard on abusive mortgages and credit cards, but Republicans and bank lobbyists want a tamer beast that won’t threaten profits too much and that answers to a higher master.
The Obama administration’s proposal to create a U.S. Consumer Financial Protection Agency (CFPA) has emerged as the main impediment to bipartisan agreement on financial regulation reform, one of the White House’s major priorities for 2010.
With the Senate Banking Committee targeting a legislative drafting session as soon as early March, the next two weeks will be crucial in deciding whether the United States keeps pace with the European Union on a global push for reform.
The White House must compromise on the issue, Senator Bob Corker, the Republicans’ chief negotiator on the issue, told Reuters in an interview. “If not, there may not be a bill,” said the first-term lawmaker from Tennessee.