Lobbying Battle Begins Over Creating Consumer Financial Protection Agency
Tuesday, July 7, 2009
Business and trade-group lobbyists are beating a path to Capitol Hill this week for the first major battle over the Obama administration's efforts to overhaul the financial regulatory system.
A coalition of business representatives, who are skeptical about a proposed Consumer Financial Protection Agency, has met repeatedly in recent weeks to hone their argument that a new regulator could cause more harm than good and to strategize about which members of Congress might be sympathetic to their cause.
These opponents of a new agency have begun visiting members of the House Financial Services Committee, which plans to take up the proposal in the coming weeks, and are putting a top priority on centrist Democrats, according to people familiar with the meetings.
"It's your basic shoe-leather lobbying," said Bill Himpler, executive vice president for government affairs of the American Financial Services Association, the trade group for the consumer credit industry. "This has become front burner -- the number-one issue of our association, at least for the foreseeable future."
In addition to AFSA, the recent discussions have involved the American Bankers Association, National Auto Dealers Association, U.S. Chamber of Commerce, Mortgage Bankers Association and other lobbyists. They are also courting other organizations, such as those representing home builders, lobbyists said.
Though the groups represent different industries with often divergent interests, they share concerns that the new agency proposed by the administration could intervene in business activities in overbearing and unproductive ways.
This coalition has solicited pitches from several public relations firms, including Powell Tate and Direct Impact, to help make their case through advertising and grass-roots political outreach. There have been discussions about launching a television campaign similar to the "Harry and Louise" ads that helped torpedo President Clinton's health-care plan in the early 1990s, said two people familiar with the meetings.
The Obama administration is seeking to give the proposed agency broad powers to oversee a range of financial products, from mortgages to credit cards and checking and savings accounts. Advocates of creating such an agency, who have formed a large coalition of their own, say that it would guard Americans from the abusive lending practices that contributed to the financial crisis, such as undocumented mortgage applications, the poor disclosure of loan terms, predatory credit card interest rates and deceptive ads.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, says he plans to have the panel vote on a bill before Congress's summer recess, scheduled to begin Aug. 3. He has called the creation of the new agency "one of our highest priorities."
Steve Adamske, a spokesman for the House Financial Services Committee, acknowledged that lobbyists and industry groups "are coming in and making their pitch." But he said that Frank is determined to create the new agency, and he dismissed criticism from opponents that policymakers are moving too quickly in creating legislation.
"The need is there," Adamske said, adding that consumer protection "is at the heart of this financial crisis. It's something we will be working on judiciously."
Opponents of the agency have been repeating several arguments in meetings with lawmakers and in media interviews. Business groups warn that another layer of regulation could increase costs, stifle innovation and curtail choices for consumers. They complain that an agency responsible solely for examining consumer financial products would not be concerned about the health of the firms providing them. They say the proposal would exacerbate the patchwork nature of current regulation by setting minimum federal standards that individual states could exceed.