Last week, reports emerged that Senate Banking Committee Chairman Chris Dodd (D-CT) was contemplating dropping the proposal to create an independent Consumer Financial Protection Agency (CFPA) from his regulatory reform bill. Regulatory reform is one of the big issues facing Congress in 2010, and the CFPA remains the provision onto which the right is focusing most of its ire.

The parties most concerned about the CFPA are the U.S. Chamber of Commerce and the biggest Wall Street financial firms. But having Wall Street firms as the face of the opposition is not the most PR-savvy of moves these days. So the Chamber is planning to “fly-in” some representatives from small businesses to Capitol Hill tomorrow, and “lead” them to a pre-arranged series of anti-CFPA meetings:

The U.S. Chamber of Commerce is hosting a “small-business fly-in” day on Wednesday to discuss the “harmful impact” of the CFPA. After a panel discussion that Sen. Mike Johanns (R-Neb.) is expected to participate in, Chamber lobbyists will lead small-business owners to a series of meetings on Capitol Hill against the creation of the CFPA.

The Chamber has openly admitted that its tactic in the fight against the CFPA is to “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.” This seems to be part and parcel of that approach.

However, the notion that the CFPA will cripple small business doesn’t hold much water. First, the Chamber’s often invoked charge that the CFPA will be able to regulate small businesses like butchers and florists is false, as the legislation clearly exempts “merchants, retailers, and sellers of nonfinancial services.” Furthermore, the Chamber leaves out that small business would benefit from the protections enforced by the CFPA, just as individual consumers would. As the Woodstock Institute pointed out:

The agency would require understandable disclosure, not the reams of fine print that has trapped business owners in unfavorable credit card contracts. It would prohibit unfair and deceptive practices, not let hazardous products like automobile title loans, which many businesses rely on to manage cash flow, slip through regulatory loopholes…Business owners need the security of knowing that the product they receive from one lender carries the same level of protection as a product from any other lender, and that all lenders — credit cards, trade credit, and independent finance companies included — are offering fair financial products.

So as Harvard Law’s Elizabeth Warren put it in an interview with Reuters today, without the CFPA “the tag on U.S. financial regulation reform may as well say ‘Made on Wall Street‘.” “The CFPA is the best indicator of whether Congress will reform Wall Street or whether it will continue to give Wall Street whatever it wants,” she said.

Last week, the Obama administration proposed a .15 percent tax on financial institutions with more than $50 billion in assets, to be assessed on liabilities, minus deposits. Since the announcement, the banking lobby — along with Republicans in Congress — have been bemoaning the supposed burden of the fee. Yesterday, Steve Bartlett, President and CEO of the Financial Services Roundtable (which represents the 100 largest financial firms in the country), appeared on C-Span to complain about the “bizarre, punitive” tax. He said that, in his view, the tax constitutes a illegal bill of attainder for singling out companies for taxation:

It is one of the more bizarre, punitive taxes I’ve ever seen. It’s sort of portrayed as a tax, and also as a way to pay back the TARP and also as a way to punish people who are expressing their views in Congress…This fee or tax is kind of a tax in search of a purpose…It singles out fifty specific companies, and those fifty companies would pay this tax.

Watch it:

Bartlett is not the only one playing the “unconstitutional” card. The Securities Industry and Financial Markets Association (SIFMA) has reportedly hired a lawyer to look into challenging the tax on constitutional grounds. But as the New York Times reported, “legal experts have called those claims dubious.” And Bartlett is just flat-out wrong that the proposal singles out fifty specific companies. In fact, it lays out a clear criteria for which firms will be affected, not naming any one in particular. This makes the case for a bill of attainder tenuous at best.

On a more substantive note, the banks are continuing to moan and groan about a proposed tax that is really quite tame. Its aim is to collect $90 billion over ten years, which amounts to $9 billion a year, from all the covered institutions collectively. JP Morgan, which just announced quarterly profits of $3.3 billion — while upping its 2009 compensation pool to $26.9 billion — would be responsible for paying just $1.5 billion annually, which is the most of any institution.

Dean Baker did some back-of-the-envelope calculating and found that “the tax will be equal to roughly 5 percent of the combined profits and bonuses at the large banks.” So it clearly could have been higher, for a longer period of time, and been allocated to continued deficit reduction even after all of TARP has been repaid.

As Paul Krugman wrote, the banks are acting like “a drunk driver who, after killing a number of pedestrians, received life-saving treatment at a nearby hospital — and responds by suing the doctor.” And it really seems that they are ready to call as out of bounds any step aimed at fully compensating taxpayers for their role in salvaging the financial system.