Small Business Groups Pressing for CFPA Creation

The debate over the creation of a Consumer Financial Protection Agency may be heating up as small business groups are coming out in favor of the independent agency that is strongly opposed by the banking industry and Senate Republicans. This support comes as Senate Banking Committee chairman Christopher Dodd, D-Conn., is trying to sway several Democrats on the panel to support a financial regulatory reform bill that includes a CFPA. The CFPA would set uniform standards for credit card and mortgage lending and aim to stop abusive and deceptive practices. "The financial crisis has demonstrated the need for a new independent federal agency to promote financial product safety and establish clear, enforceable rules of the road," according to Business for Shared Prosperity. This new agency "will help ensure we do not repeat the reckless practices we are dearly paying for today. Consumers, businesses, and our economy will be better off with the establishment of a strong CFPA," the group says. Separately, the American Sustainable Business Council has organized 200 businesses to sign a letter calling on Congress to put aside the interests of the big banks and pass CFPA legislation. "CFPA would raise consumer protection standards for all types of credit and ensure that small business owners are protected from unfair and deceptive credit options," the ASBC letter says. The small business groups issued their statements the same day (Feb. 9) Harvard Professor Elizabeth Warren, who also chairs the Congressional TARP Oversight Panel, blasted the banking industry in a Wall Street Journal editorial for opposing CFPA. "The latest lie is that the CFPA is 'big government.' The CEOs all know that the current regulatory structure, which they support, is big government at its worst; bureaucratic, unaccountable and ineffective," she says in the editorial. House Financial Services Committee chairman Barney Frank, D-Mass., welcomed Ms. Warren's editorial and commended Sen. Dodd for his continuing support for a CFPA. "I welcome Senator Dodd's intention to fight to preserve an independent consumer agency, as we were able to do against the opposition of the financial industry in the House," Rep. Frank said.