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Obama Takes The Offensive With Financial Reform

President Obama has not been one to use the bully pulpit and in the rare times that he has he’s taken a “speak-softly but carry a big stick” approach. That seems to be the case he's about to take with the creation of a consumer protection agency as part of his regulatory reform plan one year after the financial crisis.

With an apparent health care pause, the President and his team have in the recent week have returned their attention to the equally complicated task of pushing radical and complicated financial reform through Congress as the crisis mentality fades.

“No question about it, the administration has stepped up its push,” said one senior Congressional staffer familiar with the legislative agenda.

A big step in that push takes place Friday afternoon. The President takes the stage along with Treasury Secretary Timothy Geithner and the two key Congressional Democrats, Rep. Barney Frank and Sen. Chris Dodd, who are crafting legislation on the behalf of the administration.

President Obama and Tim Geithner
CNBC.com
President Obama and Tim Geithner

Analysts as well as some on Capitol Hill say the consumer issue is the one most likely to benefit from increased voter awareness and help advance legislation.

“He’ll get the phones ringing, no doubt,” says Rep. Scott Garrett, (R-N.J.), one of the authors of the GOP’s regulatory reform package, who is quick to add that opponents of the agency will also be phoning into Congressional offices.

“I suspect there will be a lot [of phone calls]. Congress will react to the public when it makes a stink,” says communications expert and former Senate aide Larry Smith, “He and Barney Frank could get a grassroots thing working to support what they're trying to do.”

That approach is evident in the White House news advisory for the event, which says the President, one of the four horsemen of financial reform, "will call on Americans to stand up to the opponents of a new Consumer Financial Protection Agency and urge Congress to act quickly in passing a regulatory reform package by the end of the year."

“People in the White House really want the consumer thing,” says the Congressional source.

And many in Congress, on both sides of the political aisle, don’t want it.

For some, it was the last thing people were thinking when they started talking about reform measures a year ago, and for that reason, the CFPA has been the most controversial component of the multi-part legislative package, which also includes the creation of a super regulator, new authority over too-big-to-fail firms, consolidated banking oversight and regulation of over-the-counter derivatives.

“Say what you may about needing it (CFPA), I don’t see the relevance of that to the crisis we just went through," says former FDIC Chairman William Isaac. “Is the White using the crisis as a pretext for getting the consumer agency. I think that’s a fair question.”

By now, the White House is well aware of such skepticism. The President’s remarks today will no doubt include references to a meeting earlier in the day with what the White House calls five Americans who “who represent the millions from across the country who have been hurt by the outdated rules regulating the financial sector."

Sources in both government and industry say the consumer protection agency may also be the financial reform measure nearest and dearest to the President’s heart.

“Look at where he came from,” says strategist Smith, referring to the President’s days as a community group lawyer. “It’s very consistent with the concept of the consumer protection agency. To most people there is the attitude the financial institutions are out to take every penny they can. He’s got a great audience.”

“This is most to the most obvious change they're making that will affect the most Americans,” says the Congressional source, who also acknowledged the President’s personal interest.

For this president, who many say has remained in campaign mode since his election victory, personal interest may dovetail nicely with the public’s ability to engage in the policy debate.

“Its probably right up there with executive compensation legislation, anything that has a populist ring to it,” says Rep. Garrett. “Other pieces of the package, like derivatives, are a little harder to explain to people. It doesn’t resonate.”

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