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. Old White Virginia Female

    Surely no one is surprised that these financial institutions do not want to be regulated. Who is supposed to be protected by this action? The consumer. Who is opposed to it? Large financial institutions. Have we not figured out yet that regulation is a good thing? Have we not figured out yet the the federal government's acts of regulation are performed to PROTECT the taxpayer, the homeowner, the American citizen when there is no one else looking out after his interest. Who precisely is lobbying Congress for YOU? Seems to me like it is the President of the United States right now.

    July 17, 2009 08:10 pm at 8:10 pm |
  2. Peter

    American enemy # 1 lobbyist and self interest groups. Both groups hide under free market, capitalism and patriotizm while milking the whole country dry, these groups never care and will never care about the beautiful industrious country they dwell in. Their main purpose is making money regardless how unethical or immoral their acts will impact the society at large. These are the same groups which egged on companies to go offshore, these are the same group who are fighting the health care reforms forgetting that, the present value of the federal government's major reported long-term "fiscal exposure" the difference between what was promised and and what was dedicated revenues- totaled $ 50 Million in 2006, This represent close to 4 times gross domestic product (GDP) in fiscal year 2006 and is up from about $20 Million, or 2 times the GDP in 2000. If we wanted to put aside today enough money to cover the promises, it would take about $440,000 per American households up from $ 190,000 in 2000. Talk about the time value of money and you gonna unmask the hypocrites pretending they are on the your side!. If people really care about the future of their children issues such as health care reforms should be addresed urgently. Remove the middle man the (lobbyist) and the health care will be affordable to all Americans.

    July 17, 2009 08:10 pm at 8:10 pm |
  3. The Lonely Libertarian of Liverpool NY

    This is just a duplicate effort and a waste of taxpayer money, we have the regulations in place, we just neeed to add some teeth to them.

    July 17, 2009 08:12 pm at 8:12 pm |
  4. Tom L

    It is fantastic that they are called "greedy credit card companies." It amazes me how people feel they have the right to credit. IT ISN'T YOUR MONEY. IT IS THE BANK THAT IS LENDING YOU THE MONEY. If you don't like the terms, then use your own money. Pretty simple. It is not life, liberty, credit and the pursuit of happiness.

    July 17, 2009 08:13 pm at 8:13 pm |
  5. SMJ in Florida

    Nathan – you're an idiot! He's arrogant? No, he's intelligent (you are enot). He's a dictator? Give examples (you're just a dick). He doesn't take advice from anyone? He is probably the most "informed" POTUS we've had in at least 8 years (at least he's not listening to Cheney or Rush like you are). He throws like a girl? And I'm sure you're perfect at everything you do. Geez, man, get a lfie!

    July 17, 2009 08:18 pm at 8:18 pm |
  6. Ted Tartaglia

    Of course the financial industry will fight oversight and regulation; it will destroy their gravy train. Wall Streeters and the big bankers should be thankful they are only facing regulation and not a firing squad.

    These thieves need to abandon their dream world and face reality.

    July 17, 2009 08:24 pm at 8:24 pm |
  7. drummajor66

    Bill Clinton & Al Gore spent 8 years reducing the size of government, thereby saving taxpayers tens of millions of dollars. This dude has undone 8 years of government reduction in six months. We have over 3 years left of this person. My lord.

    July 17, 2009 08:25 pm at 8:25 pm |
  8. Earnie

    We have to have some oversight. Too much of anything is bad. These guys have been ripping us off for decades and we have just stood here and taken it like good little zombies. Get away from your tv's. Write your congress person. Vote them out if they are only going to be for money and corporations! They are there for us. They represent us. Make them get back to doing that as the constitution prescribes. It's time for a change. Maybe a revolution. Whatever it takes. Our founding fathers would be sickened by how simple and greedy our nation has become.

    July 17, 2009 08:26 pm at 8:26 pm |
  9. Kimberly

    @fair is fair. If you have ever made a BIT of sense you would be scary. You have NO idea what you are talking about, you make NO sense, and you are clearly a very lonely bored old man. This article is about the new program to protect consumers, and NOT walstreet, dont like it...WHO CARES! Your an idiot

    July 17, 2009 08:27 pm at 8:27 pm |
  10. politics suck

    Of course they are going to fight it, i.e. the financial institutions, their entire business model with credit cards is to keep you in debt, that insures the longevity of the institution by keeping you paying fees and interest.

    July 17, 2009 08:31 pm at 8:31 pm |
  11. wall street losers, you screwed up

    you screwed up so bad you brought on a world recession

    shut up and take your medicine

    July 17, 2009 08:32 pm at 8:32 pm |
  12. Mike b

    Wall street wants to rob the consumer in the name of greed, put the lobbyist in the unemployment line.

    July 17, 2009 08:35 pm at 8:35 pm |
  13. Alice Newman

    "That's no small thing given the industry that spent $373 million on lobbying last year " .... I thought they were "broke" – turns out the financial system is just "broken" – more of "stay the course" = more financial chaos.

    July 17, 2009 08:42 pm at 8:42 pm |
  14. Jeff

    1. Create and start the agency. 2. I could care less what the financial industry says/ lobbies. 3. Let credit like this dry up. I do not care about it. 4. Perhaps then people who buy this snake oil will start to pay by cash as they need/ buy something. 5. Perhaps people will start to save instead of spend beyond their means...and with compounding interest. 6. Only this way will the U.S. be financially solvent again. 7. Have a nice weekend !

    July 17, 2009 08:44 pm at 8:44 pm |
  15. Paul

    This bickering and stupidity would not occur if Hillary Clinton were elected.

    July 17, 2009 08:51 pm at 8:51 pm |
  16. allincompassing

    For eight years, big business raped and pillaged our economy. The total amount, 11.5 TRILLION DOLLARS.

    So the new President, spends 787 Billion, and all of a sudden it's breaking the bank. I will repeat, the Bush Administration spent or lost over 11.5 TRILLION DOLLARS. Most of it spent bailing out their cronies in the finance industry. These same pukes have the nerve to complain about everyday people getting health insurance?

    Here is the link: The Bush era cost this nation 11.5 trillion: http://articles.moneycentral.msn.com/Inv…

    Read the article people, all five pages. We're lucky to have a President that knows it's going to cost some money to restart this country. MSMedia, doesn't want you to know just how much of our future was pawned away by their friends in corporate business.

    The truth is, we should be kneeling at Pres. Obama's feet, thanking him for taking on this dangerous job. The Man is doing everything he can to fight the single biggest threat to our way of life in the last hundred years.

    They always say, "Ignorance is bliss" CNN, like every other MSmedia source is not willing to tell the truth. Their advertisers demand otherwise. Financial regulation simply another example of how much help our country needs, yet Repugs & Bluedogs are fighting the President every step of the way.

    July 17, 2009 08:56 pm at 8:56 pm |
  17. David

    Exactly. The days of Corporate Lobbyist/Republicans are over. They have lied, cheated, killed, and stolen from the American people for far too long.

    No matter how many slogans they come up with, we know clearly that their ONLY 'goal' is to make profits, at any cost......to the consumer.

    Maybe it's time for a government bank that offers banking services to keep the banking industry honest??

    July 17, 2009 08:58 pm at 8:58 pm |
  18. David

    Who cares what paid lobbyist want. The American people want a Consumer Financial Products Agency, and we will have one.

    It's only those vultures who have caught been feeding off of the American public, that are fighting so hard against what's right.

    July 17, 2009 09:05 pm at 9:05 pm |
  19. Kevin in Ohio

    This will only further bankrupt the financial services industry. These regulations will cost money, and that means less for all of us as profit margins are squeezed. By the way, is anyone sick yet of receiving all those damn Privacy Notices? I wonder how much that regulation is costing American industry......

    July 17, 2009 09:06 pm at 9:06 pm |
  20. WAW

    "Fool me once, shame on me. Fool me twice..." Wall Street and the financial industry has had it's shot a Free. They've had welfare, medicare, food stamps, and every other entitlement program, doubled, tripled and handed to them over the last two years. So next time, jump out your windows, starve and go to where the sun don't shine. You've cheated, lied and deceived for the big bucks. That's over. Obey the rules or sit out the game. And finally, get ready to pay taxes on your bonuses. Any politician who even thinks about baling out Wall Street again had better be ready to retire.

    July 17, 2009 09:25 pm at 9:25 pm |
  21. Tatianna

    Dems gained Congress in 2006. If economy was bad, why didnt they propose legislation to address it. If youre looking for culprits behind the housing meltdown, no one fits the bill better than Barney Frank and Dodd.

    July 17, 2009 09:26 pm at 9:26 pm |
  22. Kenney in Albany

    Financial innovation is about coming up with new fees, charges and surcharges for the same or lower level of service. The fuel of the economy are hard working personnel. Of course they are going to fight this as it interferences with their bottom line.

    If they knew how to fairly regulate themselves there would be no need for this new agency.

    July 17, 2009 09:33 pm at 9:33 pm |
  23. jason

    credit card companies and banks did not lead to the collapse of the world economy only an idiot would think that the governments lead the the collapse period it is all 100 % the governments fault if the banks werent lending their money the market would have collapsed a long time ago

    July 17, 2009 09:55 pm at 9:55 pm |
  24. Earl in FL

    I would like to hear any member of Congress who opposes this agency defend the deceptive practices that it would prevent - because defending those practices would be defending Bernie Madoff capitalism.

    If Congress does kill the agency, Obama should order the Treasury Secretary and other regulators to carry out white-collar crime fraud investigations and prosecution of the companies that use these practices. On second thought, do the latter anyway. You have the power - use it!

    July 17, 2009 09:57 pm at 9:57 pm |
  25. 2PACOLYPSENOW

    Nathan,
    You mean a dictator in the form of Dick Cheney for 8 years who took orders from no one included his own boss, the President himself. Fly away knat.

    Anyhoo, I find it absolutely incredulous that these same financial institutions who held our government and our citizens hostage for TARP money, have been back practicing the same risky practices months later after all the money they've been taking and making this year, now don't want to be regulated, AT ALL. Are you freakin kidding me? It's like an inmate telling the corrections officers to just leave him the key to getting out the door, he'll be back in the pen before dark. The banks have amassed too much power worldwide and it's time for world governments to take them over which they should have done from day one. They have no morals or scruples, none of them and as much as I hate government intervention into anything, the banks are the primary one's who need socializing because they're like an incurable disease at the present that will on scourge the taxpayers and make it worse.

    July 17, 2009 10:00 pm at 10:00 pm |
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