From 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