The Cave: Council on Foreign Relations (CFR) - Corporate Member - U.S. Chamber of Commerce opposes and launches lobbying against new lending regulations

Sunday, September 20, 2009

Council on Foreign Relations (CFR) - Corporate Member - U.S. Chamber of Commerce opposes and launches lobbying against new lending regulations

http://www.mcall.com/business/all-lazarus.7027416sep20,0,2805355.story

Why are banks worried about new lending regulations?

September 20, 2009

Millions of consumers were burned in the meltdown of the mortgage market. Yet the financial services industry remains adamantly opposed to President Barack Obama's proposed Consumer Financial Protection Agency, intended to streamline and strengthen safeguards for the little guy.

The proposed watchdog would oversee mortgages and other consumer loans and would ensure that financial institutions comply with all relevant laws--some parental supervision that most if not all people would agree is long overdue.

Yet the U.S. Chamber of Commerce launched a lobbying and ad campaign to derail creation of the new-and-improved regulatory agency.

''This new agency would have sweeping powers to regulate over 45 industries and add yet another layer of government bureaucracy to an already disjointed and dysfunctional system,'' declared David Hirschmann, head of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness.

That's a pretty remarkable thing to say as we mark the first anniversary of the fall of Lehman Bros. and the near-collapse of the U.S. financial system.

If anyone's in a position to know why more regulation is needed, it's former New York Gov. Eliot Spitzer, who, as state attorney general, almost single-handedly held Wall Street accountable for all manner of shenanigans.

''The very fact that the chamber is opposed to this new agency shows that it's necessary,'' he told me. ''How many years have we heard them say that industry can regulate itself?''

I know: It's hard not to snicker when Spitzer criticizes others. He stepped down as governor in March 2008 after his fondness for high-priced hookers came to light.

But zipper issues notwithstanding, he's still the man when it comes to highlighting federal regulatory shortcomings and the self-serving actions of the financial services industry.

It was Spitzer's office that exposed dubious practices in the mutual fund industry in 2003, resulting in more than $4 billion in restitution to consumers. He also engineered a $1.4 billion settlement with leading investment banks and brokerages over inflated stock prices.

Spitzer believes a Consumer Financial Protection Agency would serve a crucial purpose in ensuring a level playing field as the economy claws its way back to stability.

''I have absolutely no confidence that the agencies now overseeing banks can come back to life,'' he said. ''It's time to start fresh.''

Most consumers seem to agree. A poll released last week by the Consumer Federation of America found that 57 percent of respondents support creation of a new financial watchdog agency that would assume functions currently spread among multiple agencies.

The poll also found overwhelming support for such common-sense measures as requiring banks to clearly disclose mortgage fees up front and to alert customers if they're about to overdraw an account.

It's pretty simple: Trust is something you earn. Banks have shown repeatedly that customers' interests place a distant second to the banks' interests, especially when it comes to finding new ways to raise revenue through fees and penalties.

''Americans are fed up with the tricks and traps they confront daily as they purchase and use financial products and services,'' said Travis Plunkett, of the Consumer Federation of America.

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