Financial reform bill to create consumer watchdog group, end ‘too big to fail’

Today, Democratic Senator Christopher Dodd gave details of what he said would be the most comprehensive financial reform since the 1930s. Dodd, who is chair of the Committee on Banking, Housing and Urban Affairs, highlighted one of the most hotly contested aspects of the plan: a consumer watchdog group housed at the Federal Reserve. Dodd said the head of the group would be appointed by the president and confirmed by the senate. The agency would also have a separate, independent budget.

"It'll have autonomy to craft rules and the ability to enforce those rules. It'll be there to protect consumers from the abuses that we've seen become almost standard operating procedures: skyrocketing credit card rates, the explosion of checking account fees, predatory lending by mortgage firms and much more."

Dodd also outlined other aspects of the legislation, including ending the too big to fail bailouts of financial giants; creating an early warning system to head off problems like the sub prime mortgage crisis; and bringing more transparency and accountability to derivatives and hedge funds.

Dodd said that the plan was the result of the commission's dozens of hearings and thousands of hours of testimony. The commission did include both Republicans and Democrats. But Last week talks collapsed after leaders from both parties failed to agree on key issues. Today Dodd called the effort bipartisan but did acknowledge that at this point there were no Republicans behind his proposal. Still, he said that the law making process would move ahead.

"Every day we delay is a day we are not prepared for what's around the corner: a day when Americans who have lost so much continue to lose confidence in our economic system, a day when we are refusing to confront these very real threats to our economic way of life."

Dodd pledged that legislation would be passed before the end of the year. While passage is uncertain, President Obama has indicated strong support for the reform.