Fallout: The Financial Crisis

Chamber fights consumer agency plan

Steve Henn Oct 1, 2009
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Fallout: The Financial Crisis

Chamber fights consumer agency plan

Steve Henn Oct 1, 2009
HTML EMBED:
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TEXT OF STORY

Kai Ryssdal: On the topic of the finance industry, the debate over how to protect consumers from its excesses is getting some attention in Congress. Both the Obama administration and a lot of Democrats on Capitol Hill want to create something called a Consumer Financial Protection Agency. The idea would be to keep abusive mortgages and credit cards off the market.

But that being Washington, not everybody sees things the same way. The U.S. Chamber of Commerce is lobbying hard against the agency, saying it’s going to cost jobs in an already lousy labor market. Marketplace’s Steve Henn reports.


STEVE HENN: About a month ago the Chamber of Commerce started running ads like this one.

THE CHAMBER OF COMMERCE: The so-called Consumer Financial Protection Agency is not about consumer protection.

The Chamber says it’s really about creating a big bureaucracy that could stop your butcher from offering you a line of credit. Democrats said that was a misrepresentation and clarified the point by tweaking the bill.

GAIL HILLEBRAND: It takes out the butcher the banker and the candlestick maker.

Gail Hillebrand at Consumer’s Union.

HILLEBRAND: And so now the Chamber is switching gears and trying to find some other way to say this will be bad for business.

The new argument is that a federal consumer financial watchdog would cost the economy jobs.

TOM DURKIN: This is not the time to do that.

Tom Durkin’s a former Federal Reserve Board economist. He wrote a study for the chamber noting that millions of small business people use their personal credit cards, home equity loans, even pawn their car titles to raise cash.

DURKIN: And we don’t want to raise costs, expenses for small businesses. If anything we want to make it easier for them to have access to the credit that they need.

But Durkin believes the proposed watchdog would increase the cost of credit to small businesses and stifle job growth. How that would play out is unclear.

DURKIN: You don’t have any firm conclusions on that right now, because you don’t know what the agency would do.

Still the chamber’s using Durkin’s study to argue the proposed agency would cut off credit to small business, perhaps even killing the next Hewlitt-Packard in its garage.

HILLEBRAND: It’s just not true.

Gail HILLEBRAND from the Consumer’s Union.

HILLEBRAND: The study makes an assumption that if abusive practices are stamped out, small businesses won’t get credit, but it doesn’t back that up with any facts.

Hillebrand points out small businesses are also hurt by abusive lending. In fact, many of them pushed for recent credit-card legislation in Congress.

In Washington, I’m Steve Henn for Marketplace.

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