Business for Shared Prosperity

Market News International, Dec 9, 2009

WASHINGTON (MNI) - While the House vote on the creation of the Consumer Financial Protection was delayed Wednesday, supporters and opponents kept up their battle.

Two small businesses and the Vice President of the National Association of Small Business owners, Margot Dorfman, told reporters that they need such an agency.

Elizabeth Warren "sums it up very well", said Dorfman, quoting the woman who the Obama administration is expected to name as head of the new agency when congressional Democrats use their majority to make it happen.

"Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimun payment on their credit cards," Dorfman said, quoting the Harvard University law professor who now heads the Congressional Oversight Panel overseeing the TARP.

Democratic member of the Financial Services Committee Keith Ellison said he wants legislation that will have clear rules and relieve consumer fears.

Ellison also quoted Warren, saying "If somebody told you, 'hey, you can buy this toaster but it will only burn your house down one out of every four times' or 'what if this mortgage will destroy your financial life'" the consumer would be inclined to balk.

Ellison said he thinks many mortgages were financial pitfalls. He advocated a strong CFPA that will focus primarily on the interest of the consumers. Ellison told reporters that there is no difference between consumers and small businesses. "One moment you are a small business, then the next moment you go to get some credit you are a consumer."

Ben Collins, who identified himself as a small business owner who lives and works in Charlotte, N.C., came to the news conference to discuss how Bank of America cut his company credit line causing payroll complications.

"Small businesses owners really do need protection so we have the confidence to have the financial resources operate as usual," he said. "The more difficult banks make it for us the slower this economy will begin to recover and the slower more jobs will be created."

Republicans have said the CFPA is unnecessary, and that if federal agencies would be forced to use their existing authority, the consumer would be protected without creating another arm of government.

Another small business owner, Tyrone Conard, said he owns a life insurance agency and that American Express cut his credit line in half with no warning. "I was forced to lay off employees and put off all future plans of expansion," he said.

Conard said he now is forced to rely on personal credit, finding himself in a "vicious cycle of chasing money" to run his business with hopes of one day expanding his business.

He said, "I welcome the creation of the CFPA, I believe it can only help strengthen and benefit all other small business as well as mine."

A reporter asked if Warren "would be somebody they would support or like to see on the commission." Executive Director of Americans for Financial Reform Heather Booth replied "the existing regulatory agencies were asleep at the wheel" she said "she would certainly be an excellent candidate."

The CFPA was due to reach the House floor for debate Wednesday but Financial Services Committee Chairman Barney Frank said a coalition of Democrats forced a postponement. He blamed banking industry lobbyists intent on making it easier to bypass state consumer laws.

Market News International Washington Bureau: 202-371-2121