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Banks win round 1 in consumer fight

This summer, when Obama administration officials talked about overhauling financial regulation, they threw around a catchy phrase sure to appeal to consumers: “Plain vanilla” mortgages and credit cards.

“Plain vanilla” was used to illustrate the powers of a proposed new consumer agency. The agency could set basic standards — like one-page, easy-to-understand applications for 30-year-fixed mortgages.

Now, the so-called Consumer Financial Protection Agency won’t get that power, according to a memo on the agency released by House Financial Services Chairman Barney Frank.

The memo also says that some key providers of financial services, such as consumer reporting agencies, real estate brokers and auto dealers, would not be subject to the new agency’s oversight.

Although the final bill language has yet to be released, experts on both sides of the fight agree the memo signals that top Democrats have made concessions to smooth passage of the most controversial yet symbolic part of regulatory reform.

And so far, the Obama administration appears to be OK with the changes.

“There’s nothing in there that troubles me significantly,” said Secretary Tim Geithner during a Wednesday House hearing. “I think the chairman’s proposals are a pragmatic helpful way to make sure you have a better balance of choice but protection.” Hard money training

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