Business for Shared Prosperity

By Michael Schwartz
Inside Business - Hampton Roads (VA) Business Journal, 3/12/10

The dramatic commercial paid for by the U.S. Chamber of Commerce to oppose the proposed federal Consumer Financial Protection Agency makes the issue seem dire.

It depicts a sleepless American, apparently haunted by economic woes, tossing and turning on cue with the voiceover and on-screen job loss stats.

The chamber even created a campaign, called Stop the CFPA, to fight the proposed federal body that has been the most contentious piece of the financial regulatory reform package President Obama hopes to get through Congress.

But after a forum that was to be put on by the Hampton Roads Chamber of Commerce to discuss the CFPA was canceled due to lack of interest, it's difficult to gauge whether the issue is something small businesses and citizens on the local level really care about or whether it's a big-league political lobbying issue fueled by something larger.

The matter is made more confusing by a pro-CFPA campaign from a group called Business for Shared Prosperity. It has compiled signatures in favor of the new regulatory body from the likes of high-ranking officials at the U.S. Women's Chamber of Commerce, the U.S. Hispanic Chamber of Commerce and the [SC] Small Business Chamber of Commerce.

According to legislation that introduced the CFPA to Congress, the CFPA would be a new stand-alone federal agency that could "take actions to prohibit unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for, or any offering of, a consumer financial product or service."

It was devised in light of some of the more unruly practices that were uncovered in the wake of the housing crisis that included less- than-transparent mortgage lending. The bill also wants to keep credit card companies honest.

Business for Shared Prosperity says in a letter it wants supporters to sign and send to their congressional leaders, the new agency would "expose unsafe products and services and encourage accountability and fair competition. It will help ensure we do not repeat the reckless practices we are paying dearly for today."

The Stop the CFPA campaign believes the regulator would be a threat to all businesses by "creating a new regulatory overlay over the entire business community."

The U.S. Chamber says it is all for consumer protection, but says the proposed agency is misnamed.

In its call to business to oppose the CFPA, the chamber said, "If you allow customers to pay with credit, to use a layaway program, or even to pay in more than one installment, your business would face significant new regulation."

A call to the Hampton Roads Chamber of Commerce was not returned by press time.

No response was received to an e-mail sent to the U.S. Chamber's Southeast representative.

The legislation that would create the agency has already passed the House and has lingered in the Senate, with disagreements specifically sparked by the CFPA provision. Those who oppose the CFPA but still support more consumer protection have proposed making the agency part of the Treasury Department, the FDIC or the Federal Reserve.

The argument against the stand- alone agency coming from, for example, most of the U.S. banking industry, makes a case that the current regulatory system already provides both consumer protections and safety and soundness measures. Financial institutions are already regulated by a system made up of a handful of federal agencies and individual state regulators and adding another layer of bureaucracy would only increase regulatory costs on already- strapped financial services firms that would therefore have to pass the cost down to consumers.

michael.schwartz@insidebiz.com

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