So Chris Dodd has come up with a “bipartisan” proposal for protecting consumers from predatory financial institutions, he wants to make it the Federal Reserve’s job:

The chairman of the Senate banking committee is seeking Democratic support for a Republican proposal to house a new consumer-protection regulator inside the Federal Reserve, a compromise that could clear the way for bipartisan legislation on financial reform, according to sources familiar with the negotiations.

Embracing the proposal marks a turnaround for Sen. Christopher J. Dodd (D-Conn.), who has lambasted the Fed repeatedly over the past year for not protecting borrowers from lender abuse. It is unclear whether other Fed critics, both Democrats and Republicans, will follow suit. The Fed already is responsible for writing consumer-protection rules, but it did not prohibit some of the most abusive mortgage and credit card lending practices during the housing boom.

The proposal by Sen. Bob Corker (R-Tenn.) would place a presidential appointee inside the Fed with an independent budget and a mandate to write rules protecting consumers. Those rules, however, would be enforced by existing banking regulators.

Of course, the Fed is already the consumer protection agency, and they failed, and they don’t provide information to Congress, or to anyone else.

Even Chuck Schumer (D-NY) thinks that this is a bad idea, and Schumer’s career is largely based on raising campaign money from Wall Street fatcats:

Chairman Dodd is to be commended for working so diligently to come up with a bipartisan compromise on financial services reform, which demands urgent attention. But in my 20 years of trying to get the Federal Reserve to properly protect consumers, it has been an uphill, and very often unsuccessful, battle. I am very leery of any consumer regulator being placed inside the Fed.

You know, if you’ve lost Chuck Schumer on this idea, it’s time to tell the Republicans to go Cheney themselves, and jam them up and make them vote against financial reform, over, and over, and over again.

The regional Federal Reserve banks are literally owned by the banks, and the presidents of these regional banks hold a lot of sway, and 5 of these bankers sit on the FOMC, and we are to expect an organization that has already shown itself to be both hostile to consumer protection and unresponsive to consumer complaints to somehow protect consumers?

I know that Mr. Dodd wants to make sure that he has a source of income when he leaves office in 2011, but he has a pension coming to him of something in excess of $120,000/year, so he should be fine.

Stop sucking up to the banks, sir.