WASHINGTON (CNN) - If you hold a credit card, mortgage or a student loan, Congress is considering a new agency designed to give you a lot more protection. Called the Consumer Financial Products Agency, it would set new rules to simplify contracts, eliminate fine print, and get rid of the tricks and traps that led so many people to unwittingly sign up for mortgages they couldn't afford.
Guess who is fighting it? The financial services industry. According to one of the industry's top lobbyists, stopping the agency is "our number one priority." That's no small thing given the industry that spent $373 million on lobbying last year alone, according to the Center for Responsive Politics. He insists any changes in the industry would have devastating effects on the economy. He worries the agency "basically has no restrictions on what they can do in the area of consumer protection" and warns this could freeze up the credit market: "If credit goes up and costs more, some people that are eligible for credit today will not be eligible in the future."
"This is the biggest financial fight I have seen in the 20 years I've been in Washington," says Ed Mierzwinksi, with of the U.S. Public Interest Research Group (U.S. PIRG), a consumer advocacy organization. Consumer groups are outraged by the industry's opposition. "The people who are gearing up to kill the agency are the companies whose irresponsible practices and abuses led to the collapse of the world economy," says Mierzwinski. PIRG is one of approximately 200 groups which have formed a coalition called Americans for Financial Reform, which will be pushing Congress to approve the new consumer agency.
President Barack Obama proposed the agency last month as a centerpiece of his new plan for financial regulation. He called it "a new and powerful agency charged with just one job: looking out for ordinary consumers." And it would be designed, he said, to avoid a repeat of the worst abuses that caused the subprime mortgage crisis. As the president explained, "the most unfair practices will be banned. Those ridiculous contracts with pages fo fine print that no one can figure out – those things will be a thing of the past. And enforcement will be the rule not the exception."
The agency was the brainchild of Elizabeth Warren, who is Congress' watchdog for the Wall Street bailout as chairwoman of the Congressional Oversight Panel. She says the agency would require that companies offering credit cards and loans have "page and a half long credit card agreements; there's the interest rate, there's what causes a penalty and how much you'll get charged."
The result says Warren?
"You can compare four credit card agreements in under 30 seconds and you can tell which ones the cheapest which is the riskiest." Unlike current practice, the agency will have enforcement power. "It will have the power to sue [lenders] if they're not following the rules."
Supporters say it's no different from the agencies that oversee how prescription drugs are made, or whether electronic equipment is safe. Warren insists the new limits would help the nation's overall economic picture by reducing the amount of risk in the system. But opponents see it very differently. "I don't think anyone would argue that over the last thirty years financial innovation has been the fuel of the economy," says industry lobbyist Chris Stinebert, CEO of the American Financial Services Association, who believes that's reason to tread carefully. "We need to move more slowly. We need to answer some of these tough questions about cost, about consequences, about will it stifle innovation." The association has joined with other industry groups to fight the proposal.
The House Financial Services Committee, which has been holding hearings on the agency over the last weeks, is planning to vote on it in two weeks. So far there is strong opposition to the plan.
This President has no real job. He is radical. He lacks common sense. No wonder he is coming from likes of Rev. Jeremiah Wright. America, bad days are ahead of us. It will get worse and then it will get better when Obama is out of power. These democrats wants to accomplish everything radical within a short span of time because their power is limited for another 1-2 years. I hope and pray that America will rise up and dump these radicals and progressives in the ditch so that they never surface again. If we cannot do it, Almighty will punish them because they are Godless..
addon July 17th, 2009 5:49 pm ET
I need to hear from my fellow american – republicans (a dying breed but certainly a vocal lot)
I'm seeing several posts that say directly or indirectly that Obama is the worst president in history. Is this what we are to believe? After only 6 months in office? Worst president ever after inheriting the worst economy of our live times?
Please explain how this can happen so quickly; when most of us believe that the US economy is not something that can be fixed over 2 quarters.
Got some news for you, the economy did not start to seriously tank until Obama won the election. You liberals are so spoonfed.
Most americans thankfully are smart enough to realize that it will take some time for our econemy to rebound. Safe guards must be put in place so this will not happen again and that is what the repos and special interest are afraid of. The party of No doesnt want any restraints put on them. They use the smoke screen of socialism to scare everyone. So that they will be able to plunder us again. The post saying Mr Obama is the worst president are written by morons who have the attention span of knats . They think you can screw the econemy for eight years and fix everything in six months. Thats why they lost the electon and have been complaining and trying to sabatoge the presidency ever since. They are all unpatriotic boobs. What do you expect from people who follow the likes of ol rush. Thanks Mr. Predident for getting these things in place.
F WALL STREET AND THEIR GREEDY THUGS REPUBLICANS!
They know obummer is an Idiot
MORE GOVT CONTROL
MORE OBAMA ACTING LIKE A DICTATOR
OBAMA RESEMBLES SOMEONE FROM THE 40's
GUESS WHO, HE WAS A DICTATOR
OBAMA ACTS LIKE HIM
If you hold a credit card, mortgage or a student loan, Congress is considering a new agency designed to give you a lot more protection. Called the Consumer Financial Products Agency, it would set new rules to simplify contracts, eliminate fine print, and get rid of the tricks and traps that led so many people to unwittingly sign up for mortgages they couldn't afford.
It is long over do. Go after the greedy Credit card becasue I am tried of them all making to big time off of us consumers. The only people against this will be the greedy rich CEO AND THE GREEDY HYPOCRITE GOP AND THEIR SUPPORTS.
Sorry, but WALL STREET have no creditiabity what so every.
this could freeze up the credit market – please it is alway freeze up people having been able to get any loans even after the President bailed them out. Sorry, but they brought this one on themself with all their greed that almost bankrupt this country.
obambi has been in office for 6 months. Now i know u cant turn things around in that amount of time but this is his economy and things are getting worse. What is the definition of an illegal war when the democrats wanted to go to war. I just want to hear one thing in office besides throw out the first pitch like a girl
Wealth has been redistributed to the top 2% for the last 30 years! To call Obama a socialist is laughable. The GOP couldn't care less about its constituents. They privatize the profits, then socialize the losses. Capitism at any cost, costs us ALL. This IS the result of trickle down supply-side economics.