To be sure, some see conflicts even within a narrower mandate. Bankers and their trade groups cite potential problems with check funds availability, as an example. A new consumer agency may decide that allowing banks to take several days to clear a check before making funds available to a customer is no longer appropriate, and mandate a 24-hour turnaround time.
"From a customer's view, you want funds all available the moment your check is deposited," said Jeffrey Szyperski, chief executive officer of Chesapeake Bank in Kilmarnock, Va. "With the level of the fraud in the world, the bank wants to wait to see if it clears or not."
But observers said even in those situations the pending reform legislation directs the agency to consult with the primary bank supervisors before writing a rule and to follow the Administrative Procedures Act that allows significant time for notice-and-comment on a rule's potential effects before it is adopted.
The House and Senate bills also give the banking regulators an additional tool. Under both bills, if a prudential regulator sees a safety and soundness conflict in a consumer protection rule, it can raise the dispute with the proposed systemic risk council. The Senate bill requires a two-thirds vote of the council to override a rule, but the House would require a simple majority. (As proposed, the council would have nine members, including the banking regulators and the consumer agency's director.)
Most observers said such votes would probably never be needed. A consumer agency is likely to take the regulators' views into account early on, and regulators may be reluctant to oppose a consumer protection rule unless it is egregious for fear of criticism by Congress and the public.
"Those kinds of issues can be bridged because you can simply require that the consumer financial protection agency consults with the primary regulator when it takes an action that is consequential," said William Longbrake, an executive in residence at the University of Maryland and a former vice chairman at Washington Mutual. "Those things are not done lightly because people in the press are ready to put that in the spotlight so what you do is build checks and balances."
The Obama administration has argued since last year that no disparity between safety and soundness and consumer protection exists. "There is no genuine conflict between consumer protection and safety and soundness," Deputy Treasury Secretary Neal Wolin said in an e-mail. "I reject entirely the notion that demanding responsibility, fairness and transparency in consumer financial markets somehow puts financial firms at risk."
Raj Date, chairman and executive director of the Cambridge Winter Center for Financial Institutions Policy in New York, said the entire debate is missing the point. Good consumer protection and safety and soundness, he said, go hand in hand.
"This is one of the most persistent nonsensical arguments on this debate," said Date, a former senior vice president for corporate strategy and development at Capital One Financial. "It creates a false dichotomy where you can either have safe and sound banks or you can have consumer protection, but you can't have both. That is nonsense."