July 17th, 2009
05:28 PM ET
5 years ago

Wall Street fights Obama's proposed financial agency

Congress is considering a new agency designed to give consumers more financial protection.
Congress is considering a new agency designed to give consumers more financial protection.

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.


Filed under: Economy • President Obama
soundoff (116 Responses)
  1. johnnie

    CNN you should be ASHAME of your NETWORK ,for these HATEFULL emails ,by these (FOX NEWS) crowd about the President,to even print them ,show CNN has lost it CLASS it once had.This is very dangerous, because it fuels Hate,and Divide. America wil not tolerate BIGOTS, and it appalling for CNN promote an negative asault on the President. You will be in the SPOTLIGHT ,if some CRAZY does something harmful. You are JEALOUS of the popularity of our President ,and is down right NASTY<the way (CNN IS ACTING) with these (RACIST) email. SHAME ON CNN..........

    July 17, 2009 06:12 pm at 6:12 pm |
  2. Moe, NY

    The Consumer Financial Products Agency is long overdue. Of course, the financial services industry and the lobbyists are going to fight this new agency, afterall, it will take away their license to steal. In my opinion....regulate, regulate, regulate!

    July 17, 2009 06:13 pm at 6:13 pm |
  3. Ryan

    I don't know. This organization is essentially the finance police. I'm all for it if it can be done reasonably. Let's not forget: all of us are capitalists. If they're gonna be the sherriffs of wall street, I'm just worried that they might get a little bit carried away with oversight. Don't get me wrong, oversight is something we need in wall street, I just don't want to see it taken too far. If that happens, all our corporations (aka those "thieves" who "started all of this") would just go overseas, and boom, there goes a few million more jobs.

    I'm just saying that this has to be done with care and disciplined responsibility.

    July 17, 2009 06:15 pm at 6:15 pm |
  4. White/female/age 55/Texan

    This seems like something all Americans can get behind. All of us need protection like this. Who could possibly be against it?

    July 17, 2009 06:16 pm at 6:16 pm |
  5. Joshua College Station Texas

    Down with lobbyists. Up with consumer protection.

    July 17, 2009 06:16 pm at 6:16 pm |
  6. johnnie

    CNN is trash NEWS, and will suffer in the RATINGS. keep on blocking my emails , Americas knows who you are GOP

    July 17, 2009 06:19 pm at 6:19 pm |
  7. Los

    The GOP base is usually a reliable source of useful idiots willing to swallow whatever tripe is thrown at them by the real GOP, ie the mega-rich. But with so many of them being among those who've suffered because of predatory lending, credit card gimmicks, etc, I don't know if this time they'll be as willing to vote against their own interests.

    July 17, 2009 06:19 pm at 6:19 pm |
  8. johnnie

    CNN NEEDS TO STOP THE LIES, AND TELL THE TRUTH

    July 17, 2009 06:21 pm at 6:21 pm |
  9. virginia for obama

    So Nathan! . . .What you are say is?? . . . That you are in favor of Wall Street because you hate Obama. He's considered a dictator because he's trying to HELP THE COMSUMERS. Well! If that's the case than lets here it for the dictator.

    July 17, 2009 06:21 pm at 6:21 pm |
  10. malclave

    I can't believe people here actualyl want ACORN to run Wall Street.

    Oh, wait, yes I can... they're liberals.

    July 17, 2009 06:21 pm at 6:21 pm |
  11. Old_guy

    Geee, I don't have a credit card or a debit card.
    I pay cash for everything.
    Is this new law going to affect me ?
    How much additional income tax will I have to pay ?

    July 17, 2009 06:21 pm at 6:21 pm |
  12. Asian4Hillary

    Dutch/Bad Newz, VA July 17th, 2009 5:59 pm ET

    @ Nathan

    The dictatorship was from 2000-2008. Veto this, veto that, deregulate this, deregulate that. The sub-prime mortgage meltdown happened on your guys watch. I knew when it started the sky was going to fall. Which is primarily the cause of this recession. Shall I list some of the damage?

    -A war of CHOICE in Iraq
    -Sub-prime mortgage meltdown

    =====
    SUB-PRIME MORTGAGE was started in the 90's, Bill Clinton era. People can buy homes even with bad credit. Obama represented a group in Chicago and sued a bank for not granting loans to black people with bad credit ratings/history. Don't blame Bush, blame the Democratic Party.

    July 17, 2009 06:23 pm at 6:23 pm |
  13. Ken, Arizona

    And guess who else is fighting regulation? Right, the GOP and it's ill-informed supporters who are being screwed over by the financial industry, too.

    July 17, 2009 06:23 pm at 6:23 pm |
  14. Wanda

    anyone that thinks that all these problems that our country faces can be fixed in the first 6 months of the new administration is not thinking realistically.

    July 17, 2009 06:29 pm at 6:29 pm |
  15. GOP = 21st century dodo

    @Fair is Fair

    "...cover their losses for deadbeats that stiff them."

    Yeah those poor, generous banks are so kind to lend money to these deadbeats, and they are absolutely powerless when it comes to recouping that debt. PFFFT.

    I don't see how making simpler contracts and eliminating gimmicks will COMPLETELY, as you say, eliminate profit motive. They'll still be able to profit generously, but not by tricking and confusing people.

    July 17, 2009 06:34 pm at 6:34 pm |
  16. Tim, Seattle

    @zero
    "Winning isn't everything. He should have let Hillary win the Election.
    ---–

    So we can Hillary Care 2?...um...no thanks
    BTW, she lost. Not over it yet? You must be the last PUMA on earth...lol

    July 17, 2009 06:36 pm at 6:36 pm |
  17. Steve, Columbia SC

    Ohhhhhhhhhh nooooooooooooo. Another trough program with another "czar". We need to tell this new president and Congress that this lunacy HAS TO STOP.

    Do you hear that all you Senators and Representatives from South Carolina?

    July 17, 2009 06:37 pm at 6:37 pm |
  18. Roger from CA

    Guess what, folks: governmental regulation is a GOOD thing! It is the crazy fetishization of de-regulation since the Reagan era that got us into this current mess of boom and BIG bust cycles. In particular, the insane drive to push credit onto folks who are in no position responsibly to use and pay for it has been very destructive.

    Remember, folks, the government is suppost to represent the interests of the people. The people are what count, not the special interests pouring lobbying money into Washington. There is nothing inherently wrong with the government regulating stuff.

    Call it paternalistic, or whatever, but believe it or not there really are things (like complex financial instruments and contracts) that the average member of the public is NOT qualified or experienced enough to understand, and buying into this fiction of the "free market" and "self reliance", etc., is bad.

    I guess I won't be invited to any GOP barbeques this Summer...

    July 17, 2009 06:39 pm at 6:39 pm |
  19. Steve, Columbia SC

    All you idiots who call the banks and credit card companies greedy, I would be happy as a claim if I had all of the foolish Americans spending over their heads throwing their money at me every month.

    When will someone who is in the trench financially because of their desire to live beyond their means admit they screwed up and take some personal responsibility for their actions?

    July 17, 2009 06:40 pm at 6:40 pm |
  20. Steve, Columbia SC

    Hey Denise, Wall Street doesn't owe you jack s_ _ _.

    July 17, 2009 06:41 pm at 6:41 pm |
  21. Sick -n- Tired

    I love seeing the Wall Street fat cats shake in their shoes!

    July 17, 2009 06:46 pm at 6:46 pm |
  22. Nevada dude

    I AM ALL FOR THIS. AFTER GETTING SCREWED ON CREDIT CARD INTEREST RATES WITH A RECORD OF NO LATES ANYWHERE AND NO OVER LIMITS THEY JUST RAISED MY RATES. SCREW THEM!!!!

    July 17, 2009 06:46 pm at 6:46 pm |
  23. Barry

    Oh you mean Obama is taking over another private sector that is suppose to be denied him by the Constitution. I could have swore he said that he would uphold our Constitution!!! I guess that was just another lie or that he really meant he would hold it up so that he could light it on fire to destroy it.

    July 17, 2009 06:54 pm at 6:54 pm |
  24. Moderate Democrat

    "That's no small thing given the industry that spent $373 million"

    The only way you can have that much money to spend on lobbying, is by cheating the public with fraudalent and/or misleading contracts. Hang em and hang em high.....let their children watch their criminal parents put to justice!

    July 17, 2009 06:55 pm at 6:55 pm |
  25. addon

    Thank You "fair is fair"......I see your point! Spending is out of control and Obama is pushing ahead.

    I felt the same discomfort with Bush pushing ahead with wars while avoiding publishing the budget of same. The wars will cost us more than $2.5 trillion over the next ten years. The cost for healthcare for all americans is less that 1/2 that amount.

    Now I go to this premise......is it more patriotic to put that amount of money into Iraq and Afghanistan and avoid doing what's necessary for the american public (just because we screwed up our priorities)?

    Please answer ...and I say this with respect for your intellect and honesty

    July 17, 2009 06:56 pm at 6:56 pm |
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