On the issue of the financial service reform bill winding its way through Congress, Calabria makes the following trenchant observation:
In debating against the creation of an independent consumer protection bureau, Republicans argued that all of the existing bank regulators have warned against separating consumer protection from safety and soundness regulation. They pointed out that this reflected a concern of the regulators that such separation would undermine bank safety and soundness.
Rep. Barney Frank’s response was that the current regulators lack credibility on the issue. Frank went as far as to say that “the Fed has a terrible record of consumer protection.”
Frank’s solution is to therefore transfer the Fed’s consumer duties to a new regulator. However, the Dodd-Frank bill clearly states in Section 1064 that “all employees of the Board of Governors identified … shall be transferred to the Bureau for employment.”
If one believes that such employees have “a terrible record,” then what exactly is the rationale for keeping said employees?
I don’t suppose that we are going to get a cogent answer to this question anytime soon. Instead, what will happen is that like the health care reform bill, the financial service reform bill will be passed, and then, we will find out what precise measures it contains.