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According to the Wall Street gossip pages, US Senators are close to negotiating a deal that would (finally) create a consumer protection agency...:

Top senators from each party were near a breakthrough agreement to create a new consumer-protection division within the Federal Reserve. This has been a contentious point due to heavy criticism of the Fed's past handling of its consumer-protection powers..... This could dramatically reshape the focus of the Federal Reserve. For years, it has primarily been focused on monetary policy over bank supervision and often made consumer protection an afterthought. Republicans might be more supportive of the Fed option because they might see having Fed officials involved could lead to more bank-friendly policies than an independent regulator.

Seriously guys - what the f***? Does nobody read these things before they get published? "Bank-friendly policies" are the antithesis of consumer protection: they are the reason consumers need protecting in the first place.

The entire point of a central bank is provide credible stability in the economy through a focus on monetary policy: to keep the money supply such that we do not need wheelbarrows to cart cash around to the store to buy our weekly bread. A central bank has failed if we even think that this is a possibility in the future. If you don't appreciate how difficult this is, go have a look at Argentina or dozens of other countries with 20%+ inflation rates and political interference.

We could even have a reasonable debate, over a few pints, about requiring our central banks to consider asset prices as part of their mandate, since we've seen how things work out when those crazy housing bubbles get going. But when we consider the Fed's other responsibilities - acting as the nation's banker, supervising deposit-taking institutions - it's pretty clear that consumer protection does not belong on this list. The Fed's track record to date speaks for itself.

Stick to first principles: consumer protection requires a separate, independent agency. Fin.

Update!: Felix Salmon provides backup, coherence.