As an independent group, the new consumer agency would have its own funding...and no bosses. It would be free to attack banks unless banks made loans to the right PC groups, for example.
But under the Fed, the new consumer agency has a boss...the Fed Reserve Board...and depends on Fed funding. The Fed Reserve Board is staffed by...bankers.
Now the new consumer group is no longer free to make unlimited attacks on bankers.
Well, if this a good news, then I will take it...You seem to know a lot. Thank for the explanation :-)
How is the Fed protecting banks (other than throwing money at them) these days?
A consumer protection agency under the auspices of the wolves? Yep, I see it as a real winner for me. /s
The Fed is indeed staffed by bankers: fat-cat bankers from Goldman, Morgan, and Citigroup. These are the same guys that created this mess in the first place by enthusiastically supporting CRA, sub-prime loans, leverage, risk, CDO’s, and the like.
The big banks got their bailout while 200 (and counting) small and mid-sized banks were destroyed - often to be swallowed up by the big boys at fire-sale prices.
The solution to this problem is simple: the government should explicitly and irrevocably state that no financial firm will ever be bailed out ever again, then set very broad parameters for the industry (what Milton Friedman would call rules for the game) which will reduce risk, then get out of the way.
These rules should begin with stringent capital requirements to reduce leverage and the elimination of government meddling in the housing market (CRA, Fannie, Freddie).
For Republicans to support a new rule-making beuracracy simply worsens the problem while giving the Dem’s political cover and ignoring their role in the crisis.