Obama Pushes for Consumer Watchdog Agency Despite Criticism
EmailFrom Sunlen Miller and Jordyn Phelps
The president today pushed back against the criticism over the proposed creation of the Consumer Financial Protection Agency and urged Congress to pass the legislation next week.
“The new Consumer Financial Protection Agency that I've asked Congress to create will have just one mission: to look out for the financial interests of ordinary Americans,” Mr. Obama said in the East Room this afternoon. “It will be charged with setting clear rules of the road for consumers and banks, and it will be able to enforce those rules across the board."
The agency would have a “watchdog function” that would make the financial system less complicated for consumers, the president said.
Obama first proposed the creation of the agency in June, but since the idea has met fierce resistance from the banking industry, big financial firms and most notably the US Chamber of Commerce who just last month launched a $ 2million TV ad campaign to kill the creation of the agency.
Today the president called this predictable.
“You might have seen some of these ads — the ones that claim that local butchers and other small businesses somehow will be harmed by this agency. This is, of course, completely false — and we've made clear that only businesses that offer financial services would be affected by this agency.”
Tom Quaadman at the U.S. Chamber of Commerce says that the U.S. Chamber of Commerce identified a need for increased consumer protection in November, but the CFPA would go “much, much, more farther” than just protecting consumers.
Quaadman says that the agency would result in a “vast extension of government regulations” and that the broadly defined functions of the CFPA will allow it to regulate beyond its intended scope. He added that the CFPA would also hurt taxpayers, because it would be funded through new taxes.
The president said that the agency would not restrict consumer choice and innovation, as the critics of the agency say.
“Nothing could be further from the truth. In the past, a lack of clear rules led to innovation of the wrong kind: The firms that did best were the ones who did the best job of hiding the real cost to consumers. We don't want them competing by figuring out how much they can fool ordinary Americans. By contrast, the consumer agency we're proposing would set ground rules so that firms don't have to compete to confuse families, but they have to compete to give them better choices."
The president said the truth has not stopped the “big financial firm and their lobbyists” from mobilizing against change.
“They're doing what they always do — descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently a whole bunch of those same American consumers bailed them out as a consequence of the bad decisions that they made. And since they're worried they may not be able to kill this agency, they're trying their hardest to weaken it — by asking for exemptions from this agency's rules and enforcement; by fighting to keep every gap and loophole they can find.”
Obama said the nation has already “seen and lived” the consequences when there is too little accountability on Wall Street and too little protection for Main Street.
“I will not allow this country to go back there,” Mr. Obama said.
The House Financial Services Committee is expected to vote on the legislation to create the agency next week.
-Sunlen Miller and Jordyn Phelps
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Imagine, if at least the CFPA could work as well as scam-alerts, users forums and the BetterBusinessBureau — it would make our world a better place. If it can dismantle the predatory practices of financial institutions– that would be icing on the cake.
Posted by: TawesD | October 9, 2009, 5:29 pm 5:29 pm
“Quaadman says that the agency would result in a “vast extension of government regulations” and that the broadly defined functions of the CFPA will allow it to regulate beyond its intended scope.”
Then write in the necessary limits (even if Republicans moan that it makes the bill too long for them to read in less than a year). Vague fear mongering about ‘vast extensions’ is a reason to amend the bill, not to kill it entirely. Unless of course the only intention is to kill the bill and ensure there is no one on the consumers side to counter the power of the banking and finance industry.
Posted by: jhw539 | October 9, 2009, 5:38 pm 5:38 pm
Putting the screws to the private sector. Great.
Right out of the William Ayers and Saul Alinski playbooks.
Posted by: Colonel Rebel | October 9, 2009, 6:13 pm 6:13 pm
“Putting the screws to the private sector. Great.”
The right wing would prefer that the Wall Street elite who ran the economy off a cliff remain unregulated and the consumer remains unprotected.
That’s a great way to restore market confidence.
Posted by: Ryan C | October 9, 2009, 6:52 pm 6:52 pm
“Much much more farther”. Who taught him English in college? Maybe he’s just a moron.
Banks and Wall Street would shoot their mother if it made them an extra penny. They DID collapse the financial markets, we bailed them out, then they charge us 40 billion in overdraft fees “as a convenience”
Posted by: headdcase | October 9, 2009, 7:25 pm 7:25 pm
What create ANOTHER ineffective government agency where it can only be funded by taxpayers and nobody gets fired! I see campaign bribes to get false good ratings in our near future… Obama better think up something, cause this record sure don’t merit his reelection… (Or even the Nobel Prize for that matter!)
Posted by: jafo | October 9, 2009, 7:55 pm 7:55 pm
what is so sad is that these regulations, czars, and bills by this character Obama, and his Congressional allies, are hurting the honest people! We just bailed out the crooks- or at least certain crooks- and allowed other banks to fail. Then we allows the banksters who got funds to buy up competitors, move into new markets, and compete against honest, or at least conservative, institutions like credit unions, s&ls, and smaller local banks who didn’t buy weird, complecated financial instruments. And now Obama, and his Congressional ilk, want to enforce all these regulations on the HONEST guys also! So some credit union who never bilked customers or sold crazy loans etc has to have compliance officers and add cost….so the big banks win again since they have batteries of compliance officers (and lawyers and lobbyists) to ensure they comply. Amazing. This could also apply, by the way, the small businesses, sole proprietorships, partnerships, etc. Some “change” Obama. How about punish the BAD GUYS for once.
Posted by: Ed | October 9, 2009, 9:54 pm 9:54 pm
Just another step to hamstring the entrepreneurial spirit and the free market!
Posted by: James Danley | October 9, 2009, 10:20 pm 10:20 pm
He should have it. Someone needs to watch the government and how they treat and swindle the people of this country.
We need someone to watch certain companies like Acorn and Congress and government control and I think it will create another job for a czar I mean warlord.
Posted by: Mario | October 10, 2009, 12:36 am 12:36 am
More and more and more and more government. And probably another czar. Enough with expanding the government already.
Posted by: indymind | October 10, 2009, 10:45 am 10:45 am
Good Grief. Is Obama ever going to figure out that he was not elected to be Mommy-In-Chief?
Posted by: SjB | October 10, 2009, 9:05 pm 9:05 pm
This guy wants to kill every business he can. We didn’t want our money spent to prop up the banks that were failing! Let them fall and let Capitalism work! Some of the banks were healthy, and didn’t want the money. Tax cheat Geithner FORCED them to take it. Now they are the bad guys.
The more BIG MONEY that is taken away, the less BIG MONEY there is for new jobs. Our new regime doesn’t want the economy to get better. They want people dependent on BIG GOVERNMENT.
If Obama really wants redistribution of wealth, why hasn’t he donated all his money and asked his rich friends (Buffet, Michael Moore, all the lib actors and actresses, etc) and begin redistributing to the entire country? Oh, he doesn’t want his money taken? Then why is he taking ours (involuntarily)? This man gave .037 percent of his income to charities the year before he started campaigning. Pretty selfish.
Posted by: wheresmymoney | October 11, 2009, 11:35 am 11:35 am
SJB..when the right wingers quit acting like babies-in-diapers…we won’t need a mommy- in- chief, and since you and your fellow bloggers…still….don’t seem to get it..we obviously need an agency and better yet some tough laws…After all we are a country of laws devoloped to protect citizens from other citizens…why is it you right wingers seem to think big business should not have to conform to laws that protect us all…perhaps you could find me a mission statement of some corporation-that states- they are in business not only to make as MUCH money as they can, but also serve the interests of the consumer…..its too bad research is not your forte…you just recycle garbage from your narrow sources of information
Posted by: cowgirl | October 11, 2009, 2:35 pm 2:35 pm
Just another attempt of the fool Obama to gain political power not actually helpeing anything. Kick the idiot out, along with Congress, launch an investigation into all the crooked deals in Washington DC now and start jailing or executing crooks destroying us from within. Gitmo for our corrupt politicians.
Posted by: PotatoeGater22 | October 11, 2009, 6:14 pm 6:14 pm
The right wing would prefer that the Wall Street elite who ran the economy off a cliff remain unregulated and the consumer remains unprotected.
Posted by: Ryan C | Oct 9, 2009 6:52:12 PM
No kidding. As Robin has been saying on another thread, they’re bought and paid for by both the health care and the banking lobby. Back in June Krugman said, “One thing I was concerned about was whether this consumer financial protection agency would be toothless , but the opposition of [a bank lobby group] makes me believe that it’s not such a bad idea after all.” Well, it’s already been a little watered down. Enough. The Chamber of Commerce has been losing more and more of its credibility between these ads and their ridiculous claims in regards to this and the climate change stuff. The law is going to include businesses that come under the Truth and Lending Act. Do you know many butchers, bakers and other small businesses that don’t offer financial services that come under the Truth and Lending Act? Seriously?
The President was right when he said Obama said the nation has already “seen and lived” the consequences when there is too little accountability on Wall Street and too little protection for Main Street. The new agency is going to get to look into, monitor and make decisions regarding potential unfair practices– can you roll back those debit overdraft fees; Is this mortgage deceptive? I think that’s a good thing and I hope the legislation passes.
Posted by: Alyson | October 11, 2009, 7:52 pm 7:52 pm
Correction, should read: The President was right when he said, as the above blog states, the nation has already “seen and lived” the consequences when there is too little accountability on Wall Street and too little protection for Main Street. The new agency is going to get to look into, monitor and make decisions regarding potential unfair practices– can you roll back those debit overdraft fees; Is this mortgage deceptive? I think that’s a good thing and I hope the legislation passes.
Posted by: Alyson | Oct 11, 2009 7:52:50 PM
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Posted by: Alyson | October 11, 2009, 8:30 pm 8:30 pm
call me uneducated, but what is the purpose of the FTC and what about the Glass-Steagall Act that was repealled in 1999? I was under the impression that it was the FTC’s job to do what the great O wants this new agency to do. And if I recall my history we haven’t had any mishaps in the financial sector from 1933 to the early 2000′s. BUT not 10 years after the passing of the Gramm-Leach-Bliley Act that repealed the Glass-Steagall ACt we had a “meltdown.” Hmm interesting facts. And to wrap this up let me remind all that the latest and greatest estimate of the Federal Defict for FY 09 was 1.4 TRILLION! I didn’t listen during the Presidential elections but everyone was right. IT IS TIME FOR A CHANGE.
Posted by: noprice80 | October 12, 2009, 8:40 am 8:40 am
While I think it’s a noble cause – consumers DO need someone looking out for them who have their interests at heart – I don’t think a whole new watchdog agency needs to be formed. We have the resources already in place, that with a bit of tweaking, could serve this purpose. Adding yet another layer of bureaucracy rarely solves anything.
Posted by: News reader | October 12, 2009, 2:22 pm 2:22 pm
Establishing a Consumer Financial Protection Agency (CFPA) will give bureaucrats in Washington power far beyond regulating mortgages and real estate. The CFPA may regulate consumers’ credit cards, debit cards, consumer loans, installment loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only a few.
Handing over consumer protection and enforcement powers to a new agency that does not understand the business side of banking will be burdensome for lenders and add extra layers of bureaucracy and nightmarish legal liabilities.The creation of a new federal agency, in addition to the state agencies they currently comply with, will restrict what installment lenders can charge for our services and could well force them out of business altogether.
H.R. 3126 would create a new regulator appointed by President Obama. It would have the power to strip from consumers their freedom of choice and restrict their credit opportunities in the midst of a financial recession — all in the name of “consumer protection.” For example, agency bureaucrats could tell our customers how many loans they may take and how they will borrow money. They will also have the authority to assess fees on lenders to pay for the cost of the new agency, thus increasing the cost to the consumer. Rules that regulate an already working industry to “streamline” the regulatory system are unnecessary. Finally, this agency will give the government control over compensation standards for employees of financial services institutions and could eliminate arbitration clauses.
Posted by: What if you need a loan? | October 12, 2009, 5:21 pm 5:21 pm
What consumers need is a method by which they can purchase things to consume. This means J-O-B-S. All the Czars, Commissions, Economists and other elite “thinkers” have yet to find a way to put people back to work. I suppose the real job of the Consumer Watchdog will be to keep an eye on all the poor folks; ensuring they, the poor folk, don’t steal too much from the “Watchdog Folk.”
Posted by: Percy | October 12, 2009, 6:06 pm 6:06 pm
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The first thing the Consumer Financial Protection Agency would need to protect us from is the irresponsible and reckless spending of the federal government.
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Posted by: N Waff | October 13, 2009, 1:04 am 1:04 am