A bill to create a consumer financial protection agency within the federal government faces its first Congressional vote this week. The measure, which has the strong backing of the White House, is expected to be approved by the House Financial Services Committee.
The legislation, which would give the new stand-alone agency authority to set rules regarding credit cards and other financial services products, has strong opposition. The banking industry is adamantly opposed, as is the Federal Reserve, which currently has that authority.
In his weekly radio address over the weekend, President Obama urged lawmakers to approve the new agency and not listen to the business lobbyists who oppose it.
They're doing what they always do -- descending on Congress and using every bit of influence they have to maintain a status quo that has maximized their profits at the expense of American consumers," Obama said in his remarks. "That's why we need a Consumer Financial Protection Agency that will stand up not for big banks and financial firms, but for hardworking Americans."
Obama sent the bill to Capitol Hill in June, but it has progressed slowly, as much of Congress's attention over the summer was fixed on health care legislation. House Speaker Nancy Pelosi echoed Obama's plea, saying the agency would prevent abusive anti-consumer practices that she said contributed to the global financial crises.
Along with robust supervision of financial firms and strong oversight of their practices, this agency will prevent the egregious abuses that hurt working families, the young and the elderly, and the millions of consumers who entrusted their hard-earned dollars to financial firms that deceived them, Pelosi said. "American families deserve a financial marketplace they can trust to protect their financial futures and that no longer rewards reckless behavior on Wall Street.
Barring a surprise defection or two by Democrats on the House Financial Services Committee, the measure should pass along party lines this week and move to the House floor for a vote, where its outcome is less certain. While nearly all Republicans oppose it, so do some Democrats, who have felt pressure from community bankers in their districts.
"Consumer protection has been in hands of federal bank regulators, and I figure it is fair to say that no calluses will be found on the hands of those that had consumer responsibilities, because there is no evidence of hard work there," said House Financial Services Committee Chairman Barney Frank, during his panel's hearing on the legislation last month.
The U.S. Chamber of Commerce, which has been leading the lobbying effort against the legislation, issued a statement calling for expanded power for existing regulators, but said creating a new agency is the wrong approach.
We disagree that a massive new federal agency with unprecedented powers over vast segments of the business community will be good for consumers, for America's job creators or for the economy," David Hirschmann, president of the Chamber's Center for Capital Markets Competitiveness, said in the statement. "We disagree that adding a new agency atop a broken regulatory system solves the problem or closes regulatory gaps. And, we don't agree that consumers are well served by allowing the states to each create different disclosures, and regulations on top of those created by the proposed new regulator."