Congress returns to Washington today after its summer recess, and one of the items on the agenda — though likely dwarfed by health care reform and cap-and-trade — is regulatory reform. House Financial Services Chairman Barney Frank (D-MA) is planning to start moving legislation through his committee this month, but as Reuters noted, the reforms have “no clear path forward in the Senate.”
However, the business community is taking no chances, particularly with its opposition to the proposal for a new Consumer Financial Protection Agency (CFPA). To that end, the Chamber of Commerce is launching a $2 million ad campaign aimed at quashing support for the CFPA:
The first ads running in Washington-area newspapers feature a picture of a butcher with the line: “Virtually every business that extends credit to American consumers would be affected — even the local butcher and the credit he extends to his customers“…The Chamber’s goal is twofold: move the spotlight off the unpopular commercial banks and mortgage lenders that are the target of the legislation and muster a roster of more sympathetic opponents.
The business lobby also “intends to expand its campaign to include nationwide TV and radio ads later this month. Its lobbying push could feature other small-business owners, such as accountants, landlords and event planners.” The Chamber is currently engaged in a $100 million campaign “to defend and advance economic freedom” and this ad buy fits right in with that effort.
The Chamber admits that the whole point of the ads is to draw attention away from the banks and mortgage lenders at which the CFPA legislation takes aim. But this is simply misdirection, resorting to the right-wing tactic of claiming that legislative changes will decimate small businesses. As Steve Adamske, a spokesman for Frank, said, the campaign amounts to “scare tactics from the likes of big business.”
As proposed now, the CFPA would be able to ban some of the most egregious practices in the consumer lending market (particularly those pertaining to mortgages and credit cards). It’s hard to imagine how the credit that a local butcher extends to his customers would fall into the category of products that the CFPA would be concerned with, but if there is some sort of widespread butcher credit scam going on that threatens the stability of the financial system, then it should be stopped. However, simple business credit is not likely to warrant this kind of attention, unlike the new, risky financial products that banks are dabbling in.
“We believe only a watered-down version of this legislation can pass,” said Jaret Seiberg, policy analyst at investment research firm Concept Capital. If the business lobby has its way, that is exactly what is going to happen, to the detriment of consumers and the strength of the financial system.