• Washington Post, Friday, June 12, 2009 10:48 AM

The Obama administration next week plans to propose a new agency with broad authority to protect consumers of financial products such as mortgage loans and credit cards and Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, says he will support the move, Binyamin Appelbaum reports. He had previously withheld judgment.

Consumer advocates and many members of Congress have said the Federal Reserve failure to enforce existing laws was a key cause of the financial crisis because firms could sell products that consumers could not afford. The proposed legislation would shift regulatory authority to the agency.

Industry representatives say a new agency would be even less effective at protecting consumers and that strengthening the role of the existing agencies is a better approach, Appelbaum writes.

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