05/09/2010 05:12 am ET Updated May 25, 2011

New CFPA Proposal Would Put Bank Board Over Top

The Consumer Financial Protection Agency would have a board of bank regulators over top of it that could object to and veto its proposed rules if Chairman Chris Dodd (D-Conn.) accepts a GOP proposal.

The CFPA would be overseen by "the FDIC, the Fed, the Comptroller and others," Sen. Richard Shelby (R-Ala.), a lead Republican financial reform negotiator, told reporters Tuesday. "Anything that they come up with for a rule, they could object to it and then they could vote on it."

Shelby's referring to the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (OCC), the latter of which has a dismal record on consumer protection -- one worse even than the Fed, perhaps.

Shelby said the proposal was his idea, though Sen. Bob Corker (R-Tenn.) is also involved in negotiations. Tensions between the two over the lead role in negotiations have been rising recently. "I had made the proposal," said Shelby. "I think we are narrowing."

Consumer advocates demand that the consumer agency be independent. Banks and the GOP are insisting that bank regulators have veto power over the agency.

Shelby said that Dodd received his offer "in the spirit of getting a bill."

The agency would still have a home in the Federal Reserve, but Shelby said that its location wasn't a top priority. "That's just a house," he said.