Consumer financial regulator discussed

The Obama administration is actively discussing the creation of a regulatory commission that would have broad authority to protect consumers who use financial products as varied as mortgages, credit cards and mutual funds, according to several people familiar with the matter.

The proposed commission would be one of the administration’s most significant steps yet to overhaul the financial regulatory system. It would also be one of its first proposals to address causes of the financial crisis such as predatory mortgage lending.

Plans for a new body remain fluid, but it could be granted broad powers to make sure the terms and marketing of a wide range of loans and other financial products are in the interests of ordinary consumers.

Sources, who spoke on condition of anonymity because discussions are continuing, said talks have begun with industry executives, lawmakers and financial experts about the proposal, which would require legislation.

Senior policymakers were to discuss the idea at a dinner Tuesday night at the Treasury Department.

Responsibility for regulating consumer financial products is currently distributed among a patchwork of federal agencies. Consumer protection isn’t the main mission of some of these regulators. And some financial products are not regulated at all.

The idea is likely to face significant opposition from industry groups.

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Neil Irwin contributed to this report.