New consumer watchdog considered

WASHINGTON, May 20 (UPI) -- Washington policymakers are considering the formation of a consumer-oriented agency to oversee financial products, sources close to the discussions said.

Although a new agency regulating mutual funds, credit card loans and mortgages may trigger a turf war among existing federal agencies, the topic was on the agenda of a dinner discussion at the Treasury Department, the Washington Post reported Wednesday.

The Securities and Exchange Commission and other agencies already claim to keep consumer interests at heart. However, in the recent financial meltdown, "the Federal Reserve was supposed to do this, but they were asleep at the switch," said Sen. Charles Schumer, D-N.Y., who has co-sponsored legislation meant to create a consumer-protection commission dealing with financial transactions.

Elizabeth Warren, who chairs the Congressional Oversight Panel monitoring the government's financial bailout, is a strong advocate for the new agency.

"It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house," she wrote in 2007 article for the journal Democracy.

"But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street," she wrote.