RebelTraders reports that banks are lobbying congress to stop consumer protection agency.
(emphasis mine) [my comment]
Banks Lobbying Congress To Stop Consumer Protection Agency
By · 10:46 p.m. July 28
Yep.. leave it to the banks to crank up the lobbyist machine to arm twist Congress into dropping the Consumer Financial Protection Agency. The reform that was supposed to eventually set limits on such things as credit card fees, predatory lending, etc.
The banks don't want it, they say it will hurt consumers in the long run (ha ha ha). If banks and other financial institutions are spending big bucks to lobby Congress then the only ones the law would hurt is the banks. [Agreed]
One does not need to be a rocket scientist to figure that one out.
Financial Institutions Lobbying Against Sweeping Bank Reforms
Published 07/28/09 Dustin Ensinger
Consumers feeling the pinch from unfair credit practices and hoping for relief may not get any as a cadre of financial firms, business groups, conservative lawmakers and even federal agencies have bandied together to defeat the creation of an institution to regulate consumer credit.
Last month, the Obama administration unveiled the most sweeping banking reforms since the 1930s designed to curb excessive risk taking and prevent future crises of the current meltdown's magnitude. Proposed as part of those reforms is the Consumer Financial Protection Agency, the defeat of which is the financial industry's highest priority.
The federal agency would be charged with writing rules regulating consumer protection products. The CFPA would have broad powers to regulate a whole host of financial instruments — everything from car loans, to mortgages, to student loans to credit cards.
The proposed institution is anathema to banks both large and small. The nation's larger banks, which have been showered with trillions in taxpayer dollars to prevent their failure, believe that the increased regulations could hurt their bottom lines. Community banks believe that they are being punished for the mistakes of the larger banks that caused the crisis and the new regulations will simply make it harder for them to conduct business.
"We just don't think we need another regulator. One size does not fit all in the regulatory scheme," Chris Williston, president of the Independent Bankers Association of Texas, told the Washington Post. "We're really getting punished for the sins of a lot of our big bank brethren."
Financial institutions are pulling out all the stops to defeat the creation of the institution. Banks have flooded Capitol Hill with lobbyists, according to some lawmakers. Last year, the industry spent $373 million on lobbying efforts, according to the Center for Responsive Politics. This year's numbers could dwarf last year's. [Aren't you glad that bank bobbyists are doing so well, during this serious recession?]
"We think they've hired three lobbyists for each one of us," Rep. Maxine Waters (D-CA) said at a rally to drum up support for the CFPA. "They are running up and down these halls trying to convince people who may not be focused because they are working on other committees far removed from what we do in financial services."
Their efforts have been successful thus far. Last week, Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, pulled the legislation before a vote. He had previously said that he wanted to see the legislation passed before the House breaks for its August recess. Now, he has pushed the deadline back to September or October.
"Frankly, if I were the bankers, I would not invite a debate" over providing consumers with greater protection against shady banking practices, Frank said.
"But that's what they want, and I think that's what we will have," he said vowing to take his message straight to the American people.
But beyond the money and influence of the big banks and the good reputations and grass-roots support of community banks, there are a whole host of other extremely powerful opponents to the CFPA that could ultimately spell its defeat.
One of those is the world's largest not-for-profit business federation, the U.S. Chamber of Commerce. When they speak, people tend to listen. The deep-pocketed organization has the ability to sway votes in Congress and in the general public, at will. In 2004, the organization spent $53 billion on lobbying and sent 3.7 million pieces of mail, placed 5.6 million phone calls and sent 30 million email messages on candidate's behalf. Now the CFPA is directly in their crosshairs.
"We will oppose efforts that fail to address the weaknesses of our current regulatory structure by simply adding new layers of government," Tom Donohue, president of the U.S. Chamber of Commerce, said in a statement.
In addition, the proposal has created a turf war of sorts between federal agencies. Although the Treasury Department supports the creation of the new regulatory institution, the Federal Reserve, the Federal Deposit Insurance Corporation and other agencies have publicly come out against it. They claim that it would usurp their current powers.
However, according to Elizabeth Warren, Harvard Law Professor and TARP watchdog, the current system is so convoluted and intertwined that it is completely ineffective.
"Today, seven different federal agencies have some form of regulations dealing with consumer credit. The result is a complicated, fragmented, expensive, and ineffective system. With consolidated and coherent authority, the CFPA can harmonize and streamline the regulatory system — while making it more effective," she wrote recently.
And Republican lawmakers have not shied away from throwing rhetorical bombs packed with mistruths, either. They claim that the CFPA would simply be another unnecessary intervention into the lives of the American people with severe restrictions in access to credit for the average consumer.
"They will be empowered to decide which credit cards we can receive, which home mortgages we are permitted to possess, and even whether we can access an ATM machine," Rep. Jeb Hensarling (R-TX) said.
But consumer advocacy organizations are not going quietly into the night. Over 200 national, state and local consumer, employee, investor, community and civil rights organizations have come together to form a coalition named Americans for Financial Reform. They have made the creation of the CFPA one of their key issues. And they are taking their fight directly to those powerful interests set on defeating the measure.
"The people wh o are gearing up to kill the agency are the companies whose irresponsible practices and abuses led to the collapse of the world economy," Ed Mierzwinski of the U.S. Public Interest Research Group (PIRG), a consumer advocacy organization, told CNNMoney.com.
Source The Washington Post:
House Democrats vowed Wednesday to redouble their efforts to create a new Consumer Financial Protection Agency and to battle banking lobbyists and other critics who have been chipping away at support for the measure.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said that the financial industry's "highest priority is killing this agency."
"I've been disappointed," he said at a news conference alongside consumer advocates and several Democratic lawmakers from his committee. "I didn't expect them to cheer for this. But I've been disappointed at the energy they're putting" into fighting it.
My reaction: You would think the banking industry might be tired of getting bad press. You would be wrong, considering how aggressively they are lobbying against consumer protection.
Consumer Financial Protection Agency
1) Last month, the Obama administration unveiled the most sweeping banking reforms since the 1930s, which include the creation of a Consumer Financial Protection Agency.
2) The CFPA would have broad powers to regulate a whole host of financial instruments (car loans, mortgages, student loans, credit cards, etc)
The financial industry's highest priority is killing this agency
1) Financial institutions are pulling out all the stops to defeat the creation of the institution.
2) The financial industry's spending on lobbying efforts looks set to dwarf last year's number, which was $373 million.
3) From a PR perspectives, banks are commiting a serious mistake by inviting a debate over providing consumers with greater protection against shady banking practices.
4) In addition to financial firms, a cadre of business groups, conservative lawmakers and federal agencies have bandied together with to defeat the creation of the CFPA.
The current system is completely ineffective
1) The proposal has created a turf war of sorts between federal agencies.
2) Overlapping authority to form of regulations dealing with consumer credit is spread among seven different federal agencies.
3) The fact that so many agencies are opposed the CFPA is proof that the current system is so convoluted and intertwined that it is completely ineffective.
Conclusion: My instinct is that if banks are lobbying against something, it must be good. Truthfully though, the creation of a Consumer Financial Protection Agency seems like too little, too late. The damage to the US economy has already been done. When the dollar crashes, dollar-denominated credit cards, car loans, etc will become useless. Consumer credit will disappear in the US, so the CFPA won't have much to regulate even if it does come into existence...