Proposal would limit scope of new financial protection agency

Treasury Secretary Timothy Geithner told Congress that he supports a plan by Democratic Rep. Barney Frank that would narrow the purview of the new consumer watchdog. His remarks all but guarantee that lawmakers will move ahead with financial reform legislation less ambitious than the plan that President Barack Obama outlined in June.

"There are lots of different ways to make sure that you don't create too much unbridled authority that would be damaging" to industry competition, Geithner told the House Financial Services Committee.

The proposed agency, CFPA for short, is the centerpiece of Obama's broader effort to fix the regulatory system that contributed to last year's market crisis. Among his top priorities is a separate regulator that could reach across various industries to defend financial consumers from fraud and abuse.

The current regulatory system focuses on banks, leaving swaths of the financial industry unsupervised.