Business for Shared Prosperity

By Michael R. Crittenden, Feb 4, 2010
Dow Jones Newswires

WASHINGTON -(Dow Jones)- A separate U.S. agency to regulate the financial products marketed to consumers makes sense, a former chairman of Citigroup Inc. told lawmakers Thursday.

John Reed, speaking before the Senate Banking Committee, broke with much of the banking industry by supporting the idea of a single agency to deal with mortgages, credit cards and other similar products.

"There is a good reason to create a Consumer Protection Agency with a clear and separate mandate," Reed told lawmakers in his prepared remarks. Reed left Citigroup in 2000.

The proposed Consumer Financial Protection Agency is a centerpiece of the Obama administration's efforts to overhaul regulation of the U.S. financial services industry. Banking and other industry groups have aggressively lobbied to water down or completely eliminate the agency in legislation moving through Congress, with varying degrees of success.

Sen. Christopher Dodd (D., Conn.), the Banking Committee chairman, expressed his frustration with the efforts by the private sector to hinder lawmakers' efforts.

"The refusal of large financial firms to work constructively with Congress on this effort borders on insulting to the American people who have lost so much in this crisis," Dodd said.

While the proposed consumer agency has been met with opposition from most of the business community, some progressive business groups have expressed support for the measure. The U.S. Women's Chamber of Commerce, American Business Leaders for Financial Reform and others Thursday pushed lawmakers to make sure it is included in any Senate legislation.

"Politicians love to point out that most new jobs are created by small business. They should listen to the business owners who didn't wreck the economy and want real reform to prevent a repeat," said Lewis Prince, chief executive of Vintage Vinyl in St. Louis, in a statement released by Business for Shared Prosperity, a progressive group.

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