Senate Banking Committee Chairman Chris Dodd attempted Thursday to tamp down criticism that a proposal under consideration to place a consumer division inside the Federal Reserve Board would amount to retaining the status quo.

The Connecticut Democrat said what he is pushing for is an independent regulator housed in the Fed but not controlled by the central bank.

"A lot of attention is being paid to what address the new consumer watchdog will have, but the critical question is will this office have the authority and independence it needs to prevent a replay of the abuses we have seen in recent years that burned so many Americans," Dodd said in a press release.

"I am pushing for an office with an independent head, appointed by the president and confirmed by the Senate; that has an independent budget to do its work; autonomy to craft rules; and an ability to enforce those rules."

Dodd's remarks come after several Democrats questioned his logic, with House Financial Services Committee Chairman Barney Frank calling a consumer division housed in the Fed a "bad joke."

"This is different than the system that led to the failures we saw in the past. In the past consumer protections were under the control of the Federal Reserve System and other regulators," Dodd said. "So while we haven't settled on the Fed as the place for this to be housed, there's a vast difference between what is being suggested today and the status quo that failed so miserably in the past."

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