President Barack Obama fought to keep his proposed banking overhaul on track Friday, casting the political struggle ahead as one between big financial interests and average Americans victimized by complex or unscrupulous financial transactions.
President Barack Obama fought to keep his proposed banking overhaul on track Friday, casting the political struggle ahead as one between big financial interests and average Americans victimized by complex or unscrupulous financial transactions.
The president illustrated his call for a consumer finance agency by showcasing five unwitting borrowers and bank customers whose troubles ranged from massive overdraft fees to unwanted interest-only mortgages.
"My concern are the millions of Americans who behaved responsibly and yet still found themselves in jeopardy because of the predatory practices of some in the financial industry," Obama said from the East Room of the White House.
Taking time out of a day overshadowed by his Nobel Peace Prize award, Obama confronted opponents, singling out the U.S. Chamber of Commerce, which is conducting a $2 million advertising effort to defeat the consumer plan.
"They're doing what they always do — descending on Congress and using every bit of influence they have to maintain a status quo that has maximized their profits at the expense of American consumers," Obama said of his critics.
The proposed consumer agency is a central element of a package of financial regulatory changes the administration says would prevent crisis like the one that brought Wall Street to its knees last year.
Critics such as the Chamber of Commerce have said the consumer agency is unnecessary and would impose restrictions even on retailers.
"We disagree that adding a new agency atop a broken regulatory system solves the problem or closes regulatory gaps," David Hirschmann, head of the chamber's Center for Capital Markets Competitiveness, said in a statement issued before the White House event.
The stepped-up campaign comes days before a key House committee begins assembling some of the main components of a regulatory bill. House Financial Services Committee Chairman Barney Frank, who met Friday with Obama in the White House, has called a meeting of his committee Wednesday to take up the creation of a Consumer Finance Protection Agency as well as new regulations on complex instruments known as derivatives.
Eager to put a face on the dry and complex subject of financial regulations, the president met with five individuals who had financial transactions go awry. Obama said the four women and one man were victimized by outdated regulations.
"I was caught in a debt trap," said Patricia Nelson, a 64-year-old Waukesha, Wis., woman who said she ended up paying $2,700 in interest on a $550 loan from payday lenders.
The White House seemed particularly eager to pick a fight with the Chamber of Commerce, which has challenged Obama not only on financial regulations, but also on health care and on climate change policies. White House officials want to cast the chamber as being out of touch and particularly vulnerable now, as a number of high-profile companies have resigned their membership over the climate change issue.
In his push to pass regulatory changes, Obama and his administration also have been remarkably hands-on. The administration drafted its own proposed legislation. This week, Treasury Secretary Timothy Geithner met with House Democrats, including Majority Leader Steny Hoyer, D-Md., in the latest of several administration sessions with lawmakers to press the case for an overhaul.
The effort, especially the proposal for a consumer agency, has met with stiff resistance from banks and from the chamber, which has run radio and television ads against the president's consumer effort, and from community banks that have been buttonholing members of Congress in their home districts to weaken the plan.
Frank, in an interview Friday with the Associated Press, predicted that passage of a consumer agency in the House was "very likely." But he indicated the final legislation will not go as far as the Obama administration wishes.
"There are some sensible compromises we can make," Frank said.
One of the key sticking points has been the administration's call for states to be able to override federal consumer regulations with their own tougher requirements. Banks complain that would subject them to myriad different rules.
Frank indicated that a middle ground could allow states to enact regulations covering emerging consumer issues that are not addressed in federal law.
"Do we want to say, if a new pattern that comes up that's abusive, that states can't intervene?" he asked.
