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"Restoring a Sense of Responsibility from Wall Street to Washington"
October 09, 2009
04:34 PM EST
04:34 PM EST
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Today the President pushed one of the core pillars of his vision of a new economic foundation back to the fore. Reforming our financial system and restoring common sense regulation and oversight is the only way to ensure that the economic catastrophe that began a year ago never returns. Having met just before with those suffering as a result of abuse, fraud, and deception at the hands of financial institutions, the need was never more evident.
This morning we launched a new page dedicated to this initiative, including a video from Austan Goolsbee of the Council of Economic Advisers laying out what's in it for you, and let there be no doubt that there will be a sustained focus on this issue from the White House as the President’s plan goes through Congress.
As for the special interests who are already gearing up to fight this as hard, if not harder than insurance companies have fought health reform, the President made clear he is ready for the fight:
As we've seen over the last year, abuses like these don't just jeopardize the financial well-being of individual Americans -- they can threaten the stability of the entire economy. And yet, the patchwork system of regulations we have now has failed to prevent these abuses. With seven different federal agencies each having a role, there's too little accountability, there are too many loopholes, and no single agency whose sole job it is to stand up for people like Patricia, Susan, Maxine, Andrew and Karen -- no one whose chief responsibility it is to stand up for the American consumer, and for responsible banks and financial institutions who are having to compete against folks who are not responsible.
So under the reforms we've proposed, that will change. The new Consumer Financial Protection Agency that I've asked Congress to create will have just one mission: to look out for the financial interests of ordinary Americans. It will be charged with setting clear rules of the road for consumers and banks, and it will be able to enforce those rules across the board.
This agency will have the power to make certain that consumers get information that is clear and concise -- in plain language -- so they can compare products and know exactly what they're getting themselves into. It will ensure that banks and other firms can't hide behind these ridiculously confusing contracts -- pages and pages of fine print that nobody can figure out. It will have the ability to enforce and build on the credit card reforms we passed earlier this year, so that consumers aren't hit with unfair rate hikes and penalties, or hidden charges. It will require brokers to look out for the interests of families if they give advice about mortgages. And it will ensure transparency and fair dealing for other financial products, like bank overdraft services and payday loans.
In a financial system that's never been more complicated, it has never been more important to have a watchdog function like the one we've proposed. And yet, predictably, a lot of the banks and big financial firms don't like the idea of a consumer agency very much. In fact, the U.S. Chamber of Commerce is spending millions on an ad campaign to kill it. You might have seen some of these ads -- the ones that claim that local butchers and other small businesses somehow will be harmed by this agency. This is, of course, completely false -- and we've made clear that only businesses that offer financial services would be affected by this agency. I don't know how many of your butchers are offering financial services. (Laughter.)
Contrary to what some have argued, this agency would not restrict consumer choice and innovation. Nothing could be further from the truth. In the past, a lack of clear rules led to innovation of the wrong kind: The firms that did best were the ones who did the best job of hiding the real cost to consumers. We don't want them competing by figuring out how much they can fool ordinary Americans. By contrast, the consumer agency we're proposing would set ground rules so that firms don't have to compete to confuse families, but they have to compete to give them better choices. This will also help small business entrepreneurs who often rely on credit cards and home equity loans to finance their start-up businesses.
All this hasn't stopped the big financial firms and their lobbyists from mobilizing against change. They're doing what they always do -- descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently a whole bunch of those same American consumers bailed them out as a consequence of the bad decisions that they made. And since they're worried they may not be able to kill this agency, they're trying their hardest to weaken it -- by asking for exemptions from this agency's rules and enforcement; by fighting to keep every gap and loophole they can find.
They're very good at this, because that's how business has been done in Washington for a very long time. In fact, over the last 10 years, the Chamber alone spent nearly half a billion dollars on lobbying -- half a billion dollars.
The stories we heard today, they remind us that the American people can't afford business as usual any longer. These Americans can't afford high-priced lobbyists to argue their case. They're counting on us to be their advocates, to be their voice, to restore a sense of responsibility from Wall Street to Washington. That's why we need a Consumer Financial Protection Agency that will stand up not for big banks, not for financial firms, but for hardworking Americans. (Applause.) That's why we need regulatory reform that will reward innovation and competition instead of short-cuts and abuses. That's why we can't let special interests win this fight.
We've already seen and lived the consequences of what happens when there's too little accountability on Wall Street and too little protection for Main Street, and I will not allow this country to go back there. It is time for us to move forward. It is time for real change. And I'm confident that we're going to get it done, with the help of all the people who are here today, and, most importantly, with the help of the American people, who are going to demand a better deal from their financial services.
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