from the American Prospect:
Who's Leading the Fight Against Consumer Financial Regulation? The Chamber of Commerce doesn't think consumers need real protection after the financial crisis.
Tim Fernholz | September 9, 2009 | web only
The financial crisis has taught people to be skeptical of lenders. The crash of 2008 came after borrowers, half of whom qualified for safe, prime loans, were steered instead toward sub-prime loans that lenders promised they could pay back. Mortgage lenders weren't even checking to see if people had jobs before offering loans that would bankrupt them. After considering real-estate lending alongside deceptive credit-card practices, predatory payday loans, and multiplying bank fees, it's hard to argue that consumers have been adequately protected from the financial sector.
In response, the Obama administration, along with Democrats in Congress, has proposed the creation of a Consumer Financial Protection Agency (CFPA), which would house all federal consumer financial regulation in one new office. The CFPA would make sure lenders act transparently and don't take advantage of consumers, just as the Consumer Product Safety Commission makes sure the appliances you buy aren't going to catch fire and the Food and Drug Administration ensures there is no poison in your breakfast cereal. For instance, the CFPA would require lenders to provide "plain vanilla" financial products to consumers -- loans that are certified as safe and understandable -- before laying out riskier options.
Business interests oppose the plan, mainly because it would curtail highly profitable practices, like sub-prime loans. But that's not what they say publicly. The Chamber of Commerce, the business community's umbrella group in Washington, recently organized a conference call coordinating some 200 representatives of groups who oppose the legislation. The call doesn't mention any of the serious problems that led to the financial crisis or why consumer regulation is important. Instead, it follows a "death panel" approach to political discussion: Scare the hell out of everyone.
The CFPA's regulation would primarily affect consumer lenders -- be they banks, payday lenders, check cashers, credit unions, or mortgage lenders -- not most regular businesses. But Chamber is painting the new office as an "unprecedented expansion of government intervention" that will have expensive consequences for almost everyone. Their rhetoric would recall the Chamber's opposition to the actually unprecedented government bank rescues, except the Chamber didn't oppose those. ...............(more)
The complete piece is at:
http://www.prospect.org/cs/articles?article=whos_leading_the_fight_against_consumer_financial_regulation