Debunking the Chamber on Consumer Protection
Poking holes in the Chamber's assault on a new consumer protection agency.
As our own reporters have shown many times, the US Chamber of Commerce, a lobbying behemoth that's only gaining power by the day, tends to run fast and loose with statistics, facts, even reality. On the financial reform front, the Chamber's latest assault on a new consumer protection agency—proposed by the House and Senate—fits their M.O.
At a press conference this week, Andy Pincus, counsel for the Chamber, laid out for reporters the core of the Chamber's opposition to a consumer protection agency. Essentially, Pincus said creating an agency like the one proposed by the House and Senate would layer on burdensome new regulation and bureaucracy, and moreover would choke off credit to small businesses. As a result, he said, those businesses won't have the funds to hire new employees, pay existing ones, and will ultimately fail, he said:
"Small businesses rely on credit vehicles that are often consumer credit because the small business is just a person…So the question is: How heavily are those kinds of credit vehicles going to be regulated? Are they going to cost more? Or are some of the regulations going to ban those forms of credit entirely on the grounds that they're abusive, whatever that means?"
In one sense, Pincus is right: Most small businesses are average consumers who get off the ground using the same kind of credit you and I have—namely, their credit cards. The Chamber's logic stops there, however. A consumer protection agency, if anything, would crack down on predatory credit card practices, not unlike the Credit CARD Act already in place. The consumer agency in the House bill would not only rein in on predatory practices sure to be harmful to small business owners, but would exempt retailers and other merchants who extend credit and layaway plans to consumers from oversight. (The Senate bill, while in its early stages, would do much of the same.) In short, these kinds of changes would help small business owners, not hurt them or cut off their access to credit.
Pincus also claimed that a new consumer agency might ban forms of credit used by small businesses. Perhaps if a small business owner had taken out a toxic subprime mortgage with a floating interest rate for her business, then yes, that owner might have to look for a new mortgage. One with better terms. Not much of a loss there.
In reality, the Chamber's position that a new consumer agency will choke off credit to small businesses just doesn't make sense. "There's no basis for it," says Tim Duncan, chairman of the organization Business Leaders for Financial Reform. "It's so detached from reality. There's nothing to indicate that that's true." And numerous business organizations actually support the consumer agency, including the US Women's Chamber of Commerce, the US Hispanic Chamber of Commerce, and the American Made Alliance. "For the most part, this is a real positive for business owners because they have to personally finance their own businesses," Duncan says. As for the US Chamber, Duncan adds, "I don’t think people are taking seriously the quality of their argument. The more they say this stuff, the more they dig their hole deeper in the ground."