Consumer advocates should redouble their efforts to convince members of Congress favoring big banks over the interests of ordinary Americans to support legislation which would create the Consumer Financial Protection Agency. The proposal for a new agency to protect consumers of mortgages, credit cards and other such products from abuses by lenders, is badly needed and should become law. This proposal is a key element of the Obama administration’s blueprint for financial reform and was included in a House bill that passed in December with support only from Democrats.
The financial industry, aided by a number of key Republicans, has labeled the proposed agency as unnecessary and too expensive. On the other hand, consumer groups believe the proposed agency is essential to preventing the kinds of abuses that contributed to the current financial crisis. This is a classic example of the critical choices members of the House and the Senate have to deal with that affect the public interest. In this instance, the legislators can either be on the side of the big banks or ordinary folks. It shouldn’t be a tough call if they really want to protect the public.
Elizabeth Warren, a Harvard law professor and architect of the proposal for the new agency, wrote a Wall Street Journal commentary in which she said Wall Street executives “might have had some thoughtful suggestions for how to better shape a consumer agency. Instead, they have unleashed lobbyists who are determined to do anything to kill the consumer agency.”
Any new consumer-protection regulator – whether a stand alone agency or one housed in an existing agency – must remain independent. The agency must have the power to write and enforce new rules and will need a dedicated source of funding. Individual states must be able to impose laws that go beyond federal standards, a concept that big banks have fought vehemently.
The financial industry has poured months of effort and millions of dollars into advertisements, political contributions and lobbying efforts, with their goal being to shape the proposed legislation and kill parts they say would stifle innovation and increase the cost of doing business. The big banks like the status quo and we know how poorly that has worked for most Americans.
The U.S. Chamber of Commerce, for example, has spent millions of dollars on a campaign to label the proposed agency as a massive bureaucracy and a threat to small businesses. It should be noted that Republican political consultant Frank Luntz wrote a memo in January advising opponents of the pending legislation to depict it as “filled with bank bailouts, lobbyist loopholes and additional layers of government bureaucracy.” He concluded with a handy guide of “words to use,” such as “bloated bureaucracy,” ”big bank bailout bill,” ”wasteful Washington spending” and “unintended consequences.” I believe it’s now time for Congress to take action that will finally protect the interests of ordinary folks and small business owners instead of dancing to the same old tune played by the Big Mules in Corporate America. What do you think?
Source: Washington Post
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