Rifts emerge among Dems on consumer financial regulations

Silla Brush
The Hill

Rifts are emerging among Senate Democrats over how much power the federal government should have under the Wall Street overhaul bill to pre-empt state consumer regulations.

Centrist Democrats argue Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) financial bill should do a better job of reaching a middle ground between state and federal powers. Democratic Sens. Tom Carper (Del.) and Tim Johnson (S.D.) are among those raising concerns, according to several industry and congressional sources.

Meanwhile, many liberal Democrats and consumer advocates support Dodd’s approach, and some are looking for ways to give stronger powers to states.

The balance of federal and state power is at the heart of the debate over a new federal regulator on consumer financial products. As part of its effort to overhaul Wall Street, the White House has pushed hard for more than a year to give state attorneys general and other state officials the power to pursue tougher regulations than imposed by the federal government…

…Some liberal Democrats are pushing amendments that would set stronger prohibitions on the federal government overriding states.

Sens. Sheldon Whitehouse (D-R.I.), Jeff Merkley (D-Ore.) and Dick Durbin (D-Ill.), among others, support an amendment that would prevent consumer credit transactions from having higher rates than the maximum allowed in a given state.

The pre-emption issue was a major concern in the House as well. Centrist Democrats, particularly New Democrats, have long supported federal pre-emption.

The issue was a major concern in December during the House debate on financial legislation…

The article continues at The Hill

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