The U.S. government’s proposal to establish a consumer financial protection agency has become an controversial object among the U.S. financial authorities.

U.S. Treasury Secretary Timothy Geithner arrives to testify before a House Financial services committee hearing on egulatory Perspectives on the Obama Administration’s Financial Regulatory Reform Proposalson Capitol Hill in Washington July 24, 2009.(Xinhua/Reuters Photo)

This results in “finger-pointing in place of action,” he told the House Financial Services Committee.

But the plan has bumped up against opposition from federal regulators.

Federal Reserve Chairman Ben Bernanke argued that the Fed is best suited for the role.

Monitoring risk and protecting consumers are “closely related, and thus entail both informational advantages and resource savings,” Bernanke said in his testimony to the Congress on Friday.

However, many legislators either distrust the Fed’s ability to prevent risks, or worry the new agency will just be another bureaucracy that wastes taxpayers’ money.

A number of lawmakers insist that the Fed failed to prevent the economic crisis and shouldn’t be entrusted with more responsibility but should stay focused on its primary duty of setting monetary policy.

Senator Richard Shelby of Alabama said expanding the Fed’s powers “could be very dangerous.”

Congressman Ron Paul, R-Texas, said it was foolish to give “unelected bureaucrats” the authority to determine what financial products are fair.

The proposal to create a consumer protection agency is part of a broader overhaul of the nation’s financial rules. The agency would monitor the fine print on such products as credit cards and mortgages. Analysts see the plan an important part to reform the U.S. financial regulation structure.

VietNamNet/Xinhuanet