President Barack Obama promoted his plans for a new consumer financial protection agency Friday by saying it would prevent banks from using "ridiculously confusing contracts." In
remarks at the White House, Obama also said the U.S. Chamber of Commerce had made "completely false" claims in advertisements opposing the new agency.
Obama said the business lobby group was trying to "kill" the proposal for a Consumer Financial Protection Agency that the administration sees as a key part of a regulatory overhaul aimed at preventing a repeat of the current economic crisis.
Analysts have blamed banks and financial services companies for failing to adequately warn consumers of risks they were taking in the period that led of the credit-fueled crisis.
"In a financial system that has never been more complicated, it has never been more important to have a watchdog function like the one we've proposed," Obama said.
"We have already seen and lived the consequences of what happens when there is too little accountability on Wall Street and too little protection for Main Street, and I will not allow this country to go back there."
With an apparent health care pause, the President and his team have returned their attention in the recent week, to the equally complicated task of pushing radical and complicated financial reforms 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.
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.”
“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.”
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.”
- Reuters contributed to this report