The "Restoring American Financial Stability Act of 2010"

After months of anticipation, Senator Dodd released his proposal to reform the nation’s financial structure this week.  The bill would create a Consumer Financial Protection Agency, but that agency would be housed at the Federal Reserve instead of being independent.

Our Partners at AFR hope the bill gets stronger as it makes its way through the Senate.  As Professor Warren puts it, “We’re now heading toward a series of votes in which the choice will be clear: families or banks.”

Here’s more of what AFR thinks of the proposal:

“While we appreciate Chairman Dodd’s work, we remain concerned about aspects of the bill and believe that it must be strengthened as it moves through the legislative process. One of our key concerns is the independence of the Consumer Financial Protection Agency (CFPA). A strong and independent Consumer Financial Protection Agency must be the cornerstone of any meaningful reform. We believe the best way to structure a strong and independent Consumer Financial Protection Agency is through a stand alone agency, and we are troubled by the provisions that allow Consumer Financial Protection Agency decisions to be appealed to a council dominated by institutions that failed consumers in the past, and by holes in its enforcement authority.  Derivatives, and other elements of the shadow markets must be clearly and effectively regulated, without exceptions or loopholes that undermine these rules, and we must put real measures in place to take on the menace of ‘too big too fail’ banks playing heads they win tails we lose games with our economy.

“While we are still reading the language, features of the proposal we applaud include the civil rights office and mission at the CFPA, the step towards increased accountability and decreased conflict of interest at the Federal Reserve represented by Presidential appointment of the President of the powerful New York Fed, and inclusion of the corporate governance reforms which industry opponents are trying to strip from the bill.

Read AFR’s full statement.