Dodd: Consumer Watchdog to have ‘Autonomous’ Rule Authority

A new consumer protection ‘bureau” with sweeping authority over credit cards, mortgages and other financial products will be housed within the Federal Reserve but retain a degree of autonomy, according a new outline of financial system overhaul unveiled today. The historic reform would also create a separate systemic-risk council with the power to dismantle an institution deemed to pose a threat to the U.S. economy, “but only as a last resort.”

Dodd Plan: Consumer Agency to Have New Oversight Bosses

Senate Banking Committee Chairman Christopher Dodd will propose a consumer financial protection agency within the Federal Reserve with some rule-making authority over credit card, mortgages and other financial products essential in the lives of Americans, according to various reports. But the plan – part of a strategy to win GOP support – has already met with opposition from consumer advocates, economists and many Democrats who have been pushing for an independent agency reporting straight to the President.

Interest Rate Watch: Will the Fed Modify ‘Extended Period’ Pledge?

All markets will be on watch Tuesday as Federal Reserve officials meet to signal or issue an outright direction as to interest rates and whether to modify the “extended period” posture for historically low rates that has been the monetary mantra for months. The policy-setting group of Fed officials is scheduled to meet six more times this year after Tuesday. Since the last meeting of the Federal Open Market Committee in January, this much is certain: at least two members have either opposed or questioned the wisdom of keeping the key federal funds rate at its 0-.25 percent level for the “extended” timeframe, possibly putting pressure on inflationary factors and fueling potentially harmful financial markets speculation.

Fed’s Credit Card Fee Rules Eye ‘Consumer Conduct’

The Federal Reserve’s newly announced rules restricting fees by credit card issuers focus on “consumer conduct” and what constitutes a reasonable penalty to cover an issuer’s costs. The rules, which includes prohibitions against so-called “inactivity fees,” will take effect August 22, and will mark the final phase of the sweeping set of reform laws known as the Credit CARD Act. The bulk of the legislation took effect Feb. 22.

Dodd: Consumer Agency Needs to be Strong, Independent

Senate Banking Committee Chairman Christopher Dodd, D-Connecticut, said the two parties are still divided on the key financial oversight reform issue of a consumer watchdog agency to oversee credit cards, mortgages and other crucial financial products. But added he was optimistic that a bipartisan deal was possible in coming days.

2nd Fed Official Sheds Doubt on ‘Extended’ Near-Zero Rate

A second Federal Reserve official is on the record as doubting the wisdom of keeping the benchmark interest rate at near zero for an “extended” period of time, as the current policy outlook has stood for several months. St. Louis Federal Reserve Bank President James Bullard told reporters yesterday at St. Cloud State University that he is concerned over the constant reference to a timeline on maintaining the key federal funds rate at 0-.25 percent.

Credit Card Issuers to Be More Accountable for Rate Hikes

In new rules disclosed today, the Federal Reserve is proposing to make credit card issuers more accountable by requiring them to provide as many as four reasons for every interest rate increase.
The Fed may also require rate-hike reviews every six months, but is soliciting comments from the industry that might set a long-term deadline for discontinuing a customer’s ongoing review process.

Fed to Ban Credit Card ‘Inactivity’ Fees, Restrict Other Penalties

In new rules defining “unreasonable” penalty fees under credit card reform laws, the Federal Reserve today proposed prohibiting so-called “inactivity fees” and other fees that exceed the dollar amount associated with the card customer’s violation. The Fed is also requiring card issuers that have increased rates since January 1, 2009 to “evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate.”

Fed-Housed Consumer Agency Plan Draws Ire from Both Sides

The proposal to house within the Federal Reserve what was initially an independent consumer protection agency has rekindled outcries from both sides of the debate – consumer advocates on one and business groups on the other. The plan is the closest one to a compromise to emerge and it is not quite off the table. But it still faces difficult hurdles ahead, with the Central Bank’s record in protecting consumers from unfair or predatory practices at the heart of the arguments.

Small Business Lending Still Grim, But Fed Official Hopeful

Bank loans to small businesses continue to deteriorate, and some lenders don’t anticipate much improvement for the rest of the year, according to prepared testimony by Federal Reserve Governor Elizabeth Duke. But Duke said she is “somewhat optimistic” that the tightening of credit is close to an end, and lending to small businesses will see increases later in the year — based on “some momentum” in spending by businesses and households, and the overall upswing in the equity markets.

“…Bank attitudes toward lending, including small business lending, may

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