Sen Dodd: Don't Abandon the Consumer Financial Protection Agency

The Wall Street Journal reports that Sen. Christopher Dodd, chair of the Senate Banking Committee, is thinking of abandoning the Consumer Financial Protection Agency, the centerpiece of President Obama's financial reforms designed to create an independent watchdog to protect consumers from getting gouged by the bankers.

Abandoning this reform in the face of Republican opposition is just plain dumb, managing to combine bad policy with bad politics.

It's bad policy because we've seen the current regulators don't protect consumers. They see their job as helping to sustain healthy banks. They failed miserably in the years leading up to the financial crisis, when systematic fraud and abuse helped inflate the housing bubble.

And they have failed since -- sitting on their hands as banks have gouged consumers with obscene fees and credit card interest rate hikes. Folding consumer protection into an existing regulatory agency repeats the same mistake expecting a different outcome, Einstein's definition of insanity.

And this is horrible politics. If Republicans want to defend banks against consumers, terrific. Let them filibuster the reform. Then Democrats should head into the Fall elections and have the debate. Democrats stand with consumers; Republicans with Wall Street and against "regulation." I can't think of anything — other than jobs — that will do more to boost Democratic fortunes.

To abandon that in order to gain bipartisan cooperation is the height of folly. If Senate leaders Harry Reid and Dick Durbin can take a minute away from the health care mess, they should stop this folly before it starts.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future