Although it is not yet written in stone, it appears that the consumer financial protection area that comes out of conference will have most of the attributes we wanted.

Lawmakers on a special negotiating committee narrowing differences in the broader rewrite of financial regulation in generations agreed in principle Tuesday to create a new government agency to oversee credit products offered to consumers.

Senators on the conference committee late Tuesday accepted a host of House of Representatives amendments, all but clearing the way for creation of what will be called the Bureau of Consumer Financial Protection to be housed at the Federal Reserve and partially funded by the central bank.

The panel would address several of the contributing factors to the U.S. financial crisis, especially mortgage lending, a root cause of the crisis. Big non-bank lenders and mortgage brokers, who together exploited gaps in federal regulation or located in states with weak local regulation, will now come under the purview of the bureau. Similarly, payday lenders who have had little direct federal regulation now will be under a regulatory microscope.

"Gaming the regulatory system will become totally something of the past," said Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee and a lead negotiator.

Patterned loosely after a similar panel in Canada, the Bureau Consumer of Financial Protection would be headed by an independent director who must be appointed by the president and confirmed by the Senate. The bureau will get powers of autonomy to write rules for consumer protections for almost all lenders that extend credit to consumers.

In a victory for community banks and some smaller regional lenders, the bureau’s regulatory reach will be limited to lenders with assets of $10 billion or more. For those under that threshold, their appropriate regulator would still examine their consumer credit programs although the bureau would still write rules governing all lenders.

Although no provision is set in stone until the entire negotiation is over, and a couple of controversial provisions were set aside for more back and forth offers, participants from the House and Senate agreed that the new consumer panel will set rules for and police mortgages, credit cards, student loans, many car loans and even payday lending… [emphasis added]