As MoJo‘s Andy Kroll noted yesterday, lawmakers and Obama administration officials have agreed to cut the “plain vanilla” provision from legislation establishing the Consumer Financial Protection Agency (CFPA), an office that would safeguard consumers by regulating financial products.
But apparently this dilution isn’t enough for those set against regulatory reform—in particular the Chamber of Commerce, which earlier this month launched a $2 million ad campaign claiming, among other things, a local butcher couldn’t extend credit to his customers without government interference if the CFPA is created. However, according to CNN, a memo on the CFPA by House Financial Services Committee chair Rep. Barney Frank (D-Mass) “makes it clear that lawmakers don’t want to regulate merchants and retailers who give their customers credit or layaway plans.”
Yesterday morning, a small group of the bill’s opponents gathered at the Chamber of Commerce’s headquarters in Washington DC to try another line of attack. The keynote speaker, Sen. Walter Minnick (D-Idaho) who sits on the committee that will determine the bill’s fate, expressed his dissatisfaction with the creation of an additional regulatory agency. (He also thanked the Chamber for its good behavior at a Senate hearing on the proposal on Thursday: “I was just delighted that none of your members were throwing shoes.”)
Thomas A. Durkin, former Senior Economist in the Division of Research and Statistics at the Federal Reserve Board, produced a 26-page document outlining small businesses’ reliance on consumer credit. He said that start-up companies with no history of revenue appear risky, so banks won’t give them proper loans and they are forced to fund ventures with consumer credit cards. Durkin warned that the CFPA could deter a future Microsoft, which began its life as a small start-up.
These claims bear little resemblance to the role of the CFPA as outlined by its backers in Congress. Its mission would be to simplify the terms and conditions of credit available to consumers, and to protect them from exploitation. Isn’t it fair to assume that small businesses would only benefit from protection against unscrupulous lending and credit practices?