Today is the big unveiling of the administration's fix to the financial regulatory system, and you can get the broad outlines of the proposal from the Washington Post and Wall Street Journal (or the 85-page document itself (PDF)). One central aspect of the plan is a new Consumer Financial Protection Agency, a watchdog that will supposedly prevent the lending abuses of the last several years from recurring. The new agency will "oversee mortgages, credit cards, debit cards, gift cards, and consumer and payday lending, as well as deposit accounts and related services, including overdraft protection," says the AP. In the case of mortgages, for example, the agency is expected to require that lenders offer a standard "plain vanilla" loan alongside whatever more exotic packages they cook up. The agency might also oversee auto and student loans, but that's not quite clear yet.
What is clear is that the banks don't like it. The new agency would take some powers away from the Federal Reserve to regulate financial products and doing so "cannibalizes regulatory expertise," as one industry representative puts it. The industry also warns that close oversight "could raise the cost of a range of financial products." The head of the American Bankers Association says: "We've very, very concerned about it."
So you can expect some intense lobbying on Capitol Hill as the new proposal moves through Congress, where the banks have shown their muscle before.
Other links this morning:
Obama Sought to Enlist a Wide Consensus on Finance Rules (NYT)
Loan Redos Get Tangled in Thicket of Red Tape (WSJ)
White House Turns Down Auto Suppliers' Aid Request (WSJ)
Another No to Federal Propping of California (NYT)