Creating a separate Consumer Financial Protection Agency could cause banks to make unsound loans, said Camden Fine, president and CEO of the Independent Community of Bankers.
Under the current structure, the consumer group and the safety and soundness group are housed within one agency. When tensions arise — for example, the consumer group wants someone to receive a loan, but the safety and soundness group thinks it’s too risky — there is one person at the top who makes the final call. See video for the full interview
But if President Barack Obama's financial reform plan passes, the consumer examination force, with its social goal, will continue to have a completely different mission than the safety and soundness board, who looks out for the investor.
And this time, instead of having one uniform head to appeal to, the two groups will be caught in a power struggle pushing their separate missions. This could result in banks making risky loans.
"You're going to have two co-equal agencies clashing all the time," Fine said. "They're going to catch the banker in the middle."