“Some will rob you with a six-gun, some with a fountain pen,” Woody Guthrie sang in his 1939 song “Pretty Boy Floyd.”
These days an unappetizing alliance of finance companies, banks, credit card companies, mortgage lenders and financial services firms is using a lot more than fountain pens. The American Financial Services Association, an industry group, is reported to be coordinating a mega-bucks lobbying campaign to block the Consumer Financial Protection Agency proposed by President Obama last week.
But a new coalition of nearly 200 consumer, union, community and civil rights groups is organizing too, saying, “The American public expects and deserves some basic rules of fairness in the marketplace and legitimate enforcement of those rules.”
Americans for Financial Reform — led by SEIU, U.S. PIRG, Leadership Conference on Civil Rights and the National Community Reinvestment Coalition — encompasses a range of groups from AARP to USAction, AFL-CIO to National Council of La Raza.
Jim Carr, National Community Reinvestment Coalition chief operating officer, says the coalition will be “mobilizing our networks of millions of consumers, workers, shareholders and other members to challenge the industry’s campaign to discredit needed reforms” such as the new consumer protection agency.
The new Consumer Financial Protection Agency (CFPA), part of a wider tightening of financial rules proposed by the administration, would have the power to regulate products like mortgages and credit cards. Advocates compare it to a consumer product safety commission for financial products.
‘Our society has a system to protect us from exploding toasters, but not exploding interest rates,’ ACORN organizer Brian Kettenring told Reuters. ACORN is a member of the labor-consumer coalition.
The new agency, Carr said in a statement on the , “will establish a federal watchdog, rebuild consumer confidence, level the playing field, and restore fairness in the marketplace.”
Noting that “the financial system has failed the American public,” with more than $13 trillion of household wealth destroyed, Carr said the CFPA as proposed by the president “would provide a critical check on deceptive or unfair consumer practices, such as those that led to the foreclosure epidemic and ultimately to the economic crisis we are all experiencing today.”
“Opposition to the agency from the U.S. Chamber of Commerce, Wall Street bankers and the financial services industry is a slap in the face to the millions of Americans who played by the rules and got burned by predatory products, and those now suffering under the broader economic crisis,” Carr said. “It is particularly galling when many of Wall Streets lobbyists are essentially being paid with taxpayer dollars advanced to prop up the broken financial system.”
Barbara Roper of the Consumer Federation of America, also a member of the coalition, said protecting core provisions of Obama’s proposal as it moves through Congress will be “a major challenge” as the key points, including the consumer agency, “are already coming under a coordinated and well-funded attack led by the same Wall Street firms that brought the global economy to the brink of collapse and have been on the receiving end of multi-billion-dollar taxpayer bailouts.’
The National Journal’s Under the Influence blog reports that “a few dozen banks, consumer finance companies, mortgage companies and other large lenders have been meeting under the auspices of the American Financial Services Association” to discuss forming a coalition to fight the Obama consumer agency plan.
According to Under the Influence, the groups met July 1 at the offices of Toyota, which has a large financial arm, “to try to develop a strategy that’s likely going to include hiring outside consultants to craft their message and possibly run some advertising.”
Industry public relations firms are reportedly planning to copy the notorious ‘Harry and Louise’ television ad fear campaign that helped torpedo President Clinton’s health care plan in the1990s. In those ads, a middle-aged couple discussed how a government-run health plan would hurt them.
Striking a similar note, the American Financial Services Association told the House Financial Services Committee last month, “The idea of a government-run entity dictating which personal finance products and services can – or cannot — be made available in the marketplace is troubling.”
Credit, the industry group claimed, “should not be regulated in the same way as toys, power tools and other household items that present potential physical or safety hazards to the public.”
“All consumers should be able to choose from the widest selection possible of credit products,” the group argued.
The money-lender trade group called for “balance” between consumer protections and what it euphemistically described as “allowing the financial services industry to serve its customers in the best way possible” — most consumers would call it ripping off the public in the quest for ever-bigger profits.
The Obama administration is warning the banking and financial services industry that it will not back down from its proposal to create the new consumer protection agency.
A senior Treasury Department official told members of the American Bankers Association on July 2 that President Obama is committed to the Consumer Finance Protection Agency and will fight for its passage by Congress.
Michael Barr, Treasury assistant secretary for financial institutions, told ABA members the current regulatory system ‘has failed to protect the American people and needs to be fixed in a fundamental way,’ Reuters reported.
The House Financial Services Committee will hold hearings on the proposal this month. Rep. Barney Frank, D-Mass., who chairs the committee, has said that he expects a bill to clear his panel before Congress takes its summer recess Aug. 3.
suewebb @ pww.org