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One of the most prominent reasons for our financial meltdown in 2008 was the lack of financial oversight of the banking industry. Well, Congress is actually getting around to creating a new Consumer Protection Financial Agency to finally exert proper regulation of our banking sector. Right? Wrong!

For consumer advocates, housing a new agency to protect Americans from financial-product abuse within the Federal Reserve would be a defeat after lobbying for an independent body. For banks, it would represent a victory.

The Obama administration's proposal for a consumer protection agency is part of the biggest overhaul of financial regulation since the 1930s. Putting it inside the Fed, instead of creating a standalone bureau, was a compromise proposed by Senator Bob Corker, a Tennessee Republican, and Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.

Barney Frank, Chairman of the House Financial Services Committee, called a Senate plan to house the proposed Consumer Financial Protection Agency at the Fed "a joke." Shielding consumers from harmful financial products is "the most conspicuous failure by the Fed," Frank said in an interview yesterday.

And this coming from Barney Frank, who's bill in the House of Representatives to create the same type of oversight agency is hardly any better!

"We have all sorts of individual agencies that protect Americans, and none of them is subservient to the regulator that is in charge of looking out for the industry," said Lauren Saunders, managing attorney at the National Consumer Law Center in Washington. "This agency has to be independent so that it can fix the problems the banking regulators failed to fix."

And none other than George Soros is agreeing with Barney Frank!

The Fed has an "innate conflict of interest" in trying to protect consumers while fulfilling its mission of safeguarding the rest of the financial system, billionaire George Soros said at a conference in New York today. "When Barney Frank called it a joke, I think he's right," Soros said.

By the way, that conference which Soros attended was called the "Make Markets. Be Markets" conference, which took place here in New York two days ago:

Nobel laureate Joe Stiglitz, Chief Economist for the Roosevelt Institute, urged us not to give up the fight to fix our broken financial system. Rob Johnson, Director of the Institute's Project on Global Finance, charged a do-nothing Administration with endangering our future as The Animals' "We Gotta Get Out of This Place" played in the background. TARP overseer Elizabeth Warren denounced credit card companies for preying on the little guy and plunging hard-working families into debt.

They were from academia. And from the private sector. They were lawyers, judges, former regulators -- and even billionaires, like the famed financier George Soros. They were people like financial analyst Josh Rosner, one of the first to call the subprime mortgage crisis -- and who now says that the securitization market is stalling our economy like a broken car transmission. And Simon Johnson, who warned of a financial 'Doom Cycle' that will spiral out of control if we don't wake up very soon. And Roosevelt fellow Mike Konczal, who forcefully showed how investment banks' risky business puts the entire economy in jeopardy.

Over and over, the participants warned that the banks -- bigger and more dangerous than ever -- are calling the shots. They have not been reigned in. And they are fighting with everything they've got to do things their way. "We've gone from 'we the people' to 'I the banks'", said Lynn Turner, former Chief Accountant of the SEC.

Go to the "Make Markets. Be Markets" site for video of the conference and all the coverage on this crucially important topic about financial reform.

It's simply ludicrous to give the Fed more power to oversee the banking sector when they had plenty of power to regulate and control the subprime bomb ticking away in the early part of the last decade and failed to use it. Alan Greenspan sat on many of the proposal to regulate the banks and is directly responsible for letting things get out of control:

"We were yelling at them in 2001 and 2002" to use their authority, says Michael Calhoun, president of the Center for Responsible Lending in Durham, North Carolina, and the current chairman of the Fed Board's Consumer Advisory Council. "It wasn't like people didn't know this stuff was going on."

Edward Gramlich, a Fed Governor from 1997 to 2005, proposed that the Fed use its bank holding company authority to examine subprime lending subsidiaries. The proposal was opposed by then-Chairman Alan Greenspan, he said, and never went to the Board of Governors.

Most Americans are unaware of this issue and do not realize that the agency most responsible for reigning in the excesses of the banking industry - The Federal Reserve - is on the cusp of getting even more power to regulate the industry. Do you really think they'll use that power now? It's almost like the fox guarding the hen house...

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