Yesterday, I raised my concerns about the Senate’s proposal to hand more power to the Federal Reserve Board and give the Fed the role of protecting consumers. Honestly, I thought it was a cruel joke and a perfect example of the Washington insiders protecting the interests of Wall Street. Barney Frank agrees.

  Here is what Rep. Frank, who is the chairman of the House Financial Services Committee, said yesterday:

"When I first heard it, I thought it was a joke," he said. "More consumer powers have resided in the Fed for some time than in any other agency, and they haven’t done it well."

  Though I have been concerned that parts of the House financial reform legislation itself was watered down in the face of furious lobbying by Wall Street, at least the House bill does call for an independent Consumer Financial Protection Agency. That is the proposal that I support and that is what the people of the country deserve.

  We have not lost this battle–yet. There is significant opposition to an emerging bi-partisan Senate compromise.

"Monetary policy is in the penthouse of the Fed, ‘safety and soundness’ are on the upper floors, and consumer protection has been stashed in the basement," said Senator Jeff Merkley, Democrat of Oregon. To accept the new proposal, he said, "I’d have to be convinced that the culture of the Fed has gone through some radical change."[emphasis added]

  And outside the Senate, this important point from John Taylor, president and chief executive of the National Community Reinvestment Coalition:

"The Fed has repeatedly shown a lack of desire to enforce the laws that are already on its books," Mr. Taylor said. Asked where he would want to house the new consumer agency, if not at the Fed, he replied: "I’d take the National Zoo over these guys. This is a place to bury it, or at least to make it ineffective."

Travis B. Plunkett, legislative director for the Consumer Federation of America, noted that the Fed acted only after a crisis emerged to rein in subprime mortgage lenders, though it had had that authority since 1994.[emphasis added]

  We need to generate very strong opposition to the Senate Banking Committee’s apparent "compromise". Putting consumer protection in the hands of the Fed, as Barney Frank says, is a joke. It is almost guaranteeing future financial misconduct on the part of the interests that have drained millions of Americans of their life savings and economic security.

  ACTION:

  Call Chris Dodd (202-224-2823) and tell him that you oppose giving the Fed a power that it will not use for the benefit of the people.

  Call Barney Frank (202-225-5931) and urge him to stand strong for an independent Consumer Financial Protection Agency.

  Thanks for your activism!