Proposed agency for consumer protection faces fierce debate

The big banks want responsibility for consumer protection to stay with the Federal Reserve. Smaller banks don't mind if the new agency gets rule-writing powers, but they want supervision and enforcement to remain with existing regulators. Then, says Steve Verdier, lobbyist for the Independent Community Bankers of America, the CFPA could focus on policing the non-bank lenders "that caused the problems in the first place by and large — the unregulated mortgage brokers and the check cashers."

Barr says compromise is inevitable. Even so, "We're going to have a big fight with the financial sector. … The country cannot afford to go back to the status quo."

"Of course the big lenders want to kill the CFPA," Warren says. "The agency will get rid of tricks-and-traps products. … Let's face it. This is a fight where all the money is on one side, and all the hurt is on the other."

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