Senators Get Feisty Over Shelby Amendment to FinReg’s CFPA

Forget auditing the Fed or breaking up the banks. Before senators address those proposed amendments to Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill, they need to decide whether to adopt Sen. Richard Shelby’s (R-Ala.) amendment on consumer protection.

It has been a sticking point for months. Republicans want to move the Democrats’ Consumer Financial Protection Agency out of the Federal Reserve and into the Federal Deposit Insurance Co. The Shelby provision would then strip out a number of provisions allowing the CFPA to make rules for alternative financial entities from payday lenders to credit card companies and would place the CFPA’s funding — in Dodd’s bill fixed at 12 percent of the Federal Reserve’s operating budget — under congressional oversight, among many other provisions. Democrats refuse to consider the amendment. Neither side is backing down.

Senators are currently debating the amendment on the floor, and they aren’t pulling their punches. A few minutes ago, Sen. Jeff Merkley (D-Ore.) bellowed, “[This amendment] is designed to take a knife and carve the heart out of this financial reform!”

In response, Sen. Mike Enzi (R-Wy.) said, “You cannot denigrate the other party and denigrate every single thing they put up as an amendment!” He added, “If every amendment is going to get the treatment this amendment is getting, … we’re not going to have much success on this bill!” He then argued that the bill, as written, would control, “every single little thing for Middle America!”

President Barack Obama also weighed into the consumer protection debate, releasing a statement that says, “Alternatives that gut consumer protections and do nothing to empower the American people by cracking down on unfair and predatory practices are unacceptable, and I urge the Senate to vote no.” He also said Shelby’s amendment had been “written by Wall Street’s lobbyists.”