Keeping up to Date with Financial Reform
This weekend, amidst all of the final health reform maneuvering and deal-making, President Obama weighed in on the next legislative battle—financial reform. Interestingly, he used his weekly address to make the case of pushing comprehensive reform through a divided Congress.
The Administration has plenty riding on this next fight. It clearly likes the bill which already passed the House and would like to see the Senate make similar progress. They want to empower Senator Chris Dodd to cut the best deal possible, and the White House has been clear from the start that they believe this involves the creation of a robust new entity to look out for the needs of consumers.
As I have previously noted, this effort has many moving pieces. It is a large reform package that would significantly alter the regulatory landscape of financial services. And while many are focused on the big boy banks, the Administration also believes that many of the most debilitating financial practices were promulgated by smaller firms, including the largely unregulated check cashers and payday lenders. I agree and I think their emphasis is worth noting.
Here is what the President had to say:
“Because this financial crisis wasn’t just the result of decisions made by large financial firms; it was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages. And while there were many who took out loans they knew they couldn’t afford, there were also millions of people who signed contracts they didn’t fully understand offered by lenders who didn’t always tell the truth.
This is in part because the job of protecting consumers is spread across seven different federal agencies, none of which has the interests of ordinary Americans as its principal concern. This diffusion of responsibility has made it easier for credit card companies to lure customers with attractive offers then punish them in the fine print; for payday lenders and others who charge outrageous interest to operate without much oversight; and for mortgage brokers to entice homebuyers with low initial rates only to trap them with ballooning payments down the line.
For these banking reforms to be complete – for these reforms to meet the measure of the crisis we’ve just been through – we need a consumer agency to advocate for ordinary Americans and help enforce the rules that protect them. That’s why I won’t accept any attempts to undermine the independence of this agency. And I won’t accept efforts to create loopholes for the most egregious abusers of consumers, from payday lenders to auto finance companies to credit card companies.”
It sounds like this President is gearing up for another battle. You can watch him make a fuller case here.
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