Obama considers Financial Product Safety Commission
The Obama administration may create a regulator to protect consumers who buy financial products in the way the US Consumer Product Safety Commission regulates manufactured goods, Reuters reports.
A Financial Product Safety Commission is being discussed by the Treasury Department.
"No decisions have been made, but the administration is actively seeking various viewpoints as it puts together its framework," a Treasury official said.
Included will be the formation of a systemic risk regulator, likely at the Federal Reserve, to monitor far-reaching financial risks in the economy, as well as the empowerment of an agency, likely the Federal Deposit Insurance Corp, to seize and unwind large, failing non-bank firms, Reuters said.
Democratic Senators Richard Durbin, Charles Schumer and Ted Kennedy wrote to Treasury Secretary Timothy Geithner in April urging him to include their proposed Financial Product Safety Commission in administration plans for financial reforms.
"There is no reason for us to have regulations that prevent toasters from exploding into flames, but no protections to prevent mortgages and credit cards from doing the same," the senators wrote.
"Deceptive and dangerous financial products imperil millions of individual families. A Financial Product Safety Commission would set baseline safety standards for financial products like mortgages and credit cards, just as the Consumer Product Safety Commission sets standards for consumer goods."
The lawmakers introduced legislation in Congress in March along these lines. The senators told Geithner their bill is supported by dozens of public advocacy groups.
