GOPs oppose proposal for consumer bureau at Treasury Department

Republicans on the Senate Banking Committee oppose a measure to create a bureau of financial protection at the Treasury Department, a Senate Republican aide said on Saturday evening.

The proposal represented an effort by Committee Chairman Chris Dodd (D-Conn.) to strike a bipartisan deal on legislation to overhaul the financial system. The consumer protection provisions have been the most controversial aspect of the debate.

{mosads}Dodd and Republicans on the panel discussed legislation creating a consumer bureau at the Treasury Department instead of a standalone government agency as originally proposed by President Barack Obama.

“It is one of several proposals he has advanced to seek a bipartisan consensus and enhance consumer protection,” Kirstin Brost, spokeswoman for Dodd, said earlier on Saturday.

Without Republican support for the proposal, senators will likely need to continue negotiating behind closed doors on a different plan or debate the issue during committee markup.

The bureau, according to a summary of the proposal, would have a director appointed by the president, an independent budget and power to write rules. The proposal also envisioned an appeals process for banking regulators to weigh in on the bureau’s rules.

The proposal represented a significant shift from the Obama administration’s original aim of creating a standalone Consumer Financial Protection Agency (CFPA) to regulate home loans, credit cards and other products. Republicans unanimously opposed that plan, and the financial industry has lobbied aggressively against a standalone agency.

Republicans prefer placing the consumer protection powers with prudential regulators in charge for the safety and soundness of banks.

Banking panel Republicans continue to discuss their own alternative financial overhaul legislation.