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It's MORNING EDITION from NPR News. I'm Renee Montagne.
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And I'm Steve Inskeep.
Congress is spending this fall considering, in effect, how to regulate everything. Lawmakers are tinkering with the financial system, which touches our entire economy. That system nearly collapsed, of course, during the financial crisis. And today, a House committee is considering new financial regulations. Among other things, President Obama favors a new agency to protect financial consumers.
NPR's Scott Horsley reports.
SCOTT HORSLEY: The average consumer may not know or care very much about bank capital requirements or derivative trading rules, but consumers do know when they feel ripped off by hefty overdraft fees or by a home refinancing that was supposed to save money but winds up costing more. President Obama says protecting consumers from such abuses would also help to protect the economy from another financial meltdown.
President BARACK OBAMA: 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.
(Soundbite of applause)
HORSLEY: Regulators such as the Federal Reserve and the Federal Deposit Insurance Corporation are already supposed to look out for consumers, but that's not their primary responsibility. And so long as regulators also have to worry about keeping banks solvent, the administration says, consumer protection will always take a backseat. That's why Mr. Obama is lobbying for a stand-alone Consumer Protection Agency, and Travis Plunkett of the Consumer Federation of America is among those cheering him on.
Mr. TRAVIS PLUNKETT (Legislative Director, Consumer Federation of America): The president is making it clear that it's a big priority for him, and he's willing to spend political capital on it. That's the kind of support from the White House that is going to be necessary to overcome the huge opposition.
HORSLEY: Last week, the president pointed to a multi-million dollar ad campaign that the Chamber of Commerce had launched. The Chamber is trying to defeat the proposed Consumer Protection Agency, though you wouldn't know it at first.
(Soundbite of radio ad)
Ms. AMANDA ENGSTROM (U.S. Chamber of Commerce): This is Amanda Engstrom with the U.S. Chamber of Commerce. We support strong consumer protection.
HORSLEY: But, the radio ad continues, a new government bureaucracy is not the way to get there. The chamber warns that the proposed Consumer Financial Protection Agency, or CFPA, would make credit harder to come by and more expensive.
(Soundbite of radio ad)
Ms. ENGSTROM: Visit stopthecfpa.com and tell Congress to stand up for America's job creators.
Unidentified Man: Paid for by the U.S. Chamber of Commerce.
HORSLEY: David Hirschmann, who runs the Chamber's Center For Capital Market Competitiveness, complains the problem with the U.S. financial system is not too few government regulators but too many, some of them working at cross purposes.
Mr. DAVID HIRSCHMANN (Center For Capital Market Competitiveness): We need smarter, more effective regulation, not simply more regulation.
HORSLEY: Hirschmann also worries that even if the consumer watchdog agency becomes a reality, the legislation as it's now written would give states the power to set their own more stringent rules. He says that could lead to reams of unnecessary paperwork.
Mr. HIRSCHMANN: What you're going to end up with is more foam books of disclosure to consumers which aren't particularly helpful. Fifty-one sets of disclosure is not better than one.
HORSLEY: In the years leading up to last year's crisis, state regulators had little power over national banks. The Consumer Federation's Plunkett thinks giving states a share of the oversight task is a good idea.
Mr. PLUNKETT: The states, for example, were the first to blow the whistle on abusive mortgage lending. Had they not been blocked by federal regulators, they might have been able to stop some of the worst forms of lending in these states. But they were blocked by federal regulators, which is why the president has now said that this agency should set the floor but not the ceiling.
HORSLEY: A survey this summer by the federation found a majority of Americans support the president's call for a new consumer watchdog agency. But with business interests lined up against it, the proposal faces a steep climb in Congress. White House spokesman Robert Gibbs was asked recently if the president is prepared to veto the financial overhaul bill if the consumer protection agency is not included.
Mr. ROBERT GIBBS (White House Spokesman): The president would not sign any bill that he thought was too weak.
HORSLEY: But, Gibbs said, the administration is confident the proposed watchdog agency will be part of any regulatory rewrite that emerges from Congress.
Scott Horsley, NPR News, Washington.
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