Get ready, here comes a battle. Rep. Barney Frank will be marking up legislation to create a Consumer Financial Protection Agency this July as part of the president's financial regulatory reform. The agency would be a central clearinghouse for all consumer products, from mortgages and credit cards to payday loans and checking accounts, with the power to write industry-wide rules. In one corner,
On Thursday, a senior Treasury Department official told members of the American Bankers Association that President Barack Obama is committed to the Consumer Finance Protection Agency and will fight for its passage through Congress.
Michael Barr, Treasury assistant secretary for financial institutions, told ABA members the current regulatory system "has failed to protect the American people and needs to be fixed in a fundamental way," said one person who heard the call.
In the other corner,
A knowledgeable industry source confirmed yesterday that, as part of their efforts to roll back the Obama proposal for a consumer financial products regulator, several lobbying organizations representing banks are developing a "Harry and Louise"-style ad campaign, after the commercials that targeted the Clinton healthcare plan in the early '90s. The ads will emphasize the intrusiveness of the proposal--of the government "telling you what you can and can't buy," according to the source.
This fight has been brewing for a few weeks after it became clear that the CFPA threatens many of the industry's most cherished pernicious pratices, from risky mortgages to blistering fees. There has been a lot of concern on the Hill and among progressive and consumer rights groups in D.C. that the administration would not fight hard on this portion of its regulatory reform plan, which is by far the best part of the plan, but Treasury officials have been making the right signals about toughening up on the banks. They've managed to convince some trade associations to back off:
The National Association of Realtors attended an early brainstorming session, but will not join a coalition opposing the consumer agency, a spokeswoman said.
"We did attend the meeting ... However we declined to contribute or participate in their campaign," said Mary Trupo. "It is our belief that (the agency) needs to move cautiously forward in creating its mission."
I'll have a longer reported piece on the whole thing tomorrow, but expect this fight to grow in the coming weeks.
-- Tim Fernholz
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