Senate Banking chairman Chris Dodd is circulating his new compromise plan for a consumer financial regulator. The New York Times and Wall Street Journal both summarized the proposal last night, but here is a copy of Dodd's still-rough outline.
As compromises go, it could be worse. It drops the idea of a stand-alone agency that would be devoted entirely to consumer financial regulation, a cornerstone of the White House financial overhaul and of the House-passed bill. Instead, it would create a "Bureau of Financial Protection" within the Treasury. Its director would be selected by the President, rather than the Treasury secretary, and it would have its own budget.
The New York Times reports this morning that President Obama will announce a new push today for new limits on the size of banks and new prohibitions on their ability to conduct proprietary trading.
The politics of this are obvious enough: after the Massachusetts disaster, which has dealt a major blow to the prospects for passing even a weak health care reform, Obama is reaching for something -- anything! -- to change the subject. With the big bailed-out banks reporting hefty profits and ginormous bonuses this week, at the same time that they fight off regulation and a modest new tax, what better time than this to bash the banks.
At this writing, we don't know any details about what Obama will propose. They appear to echo ideas that Paul Volcker, the former Fed chairman, has been pushing in vain at least a year now.