Financial firms fight consumer agency
The financial industry says it will attempt to block the Obama administration's proposal for a consumer protection agency. But its lobbyists may have a difficult battle ahead. Steve Henn reports.
President Barack Obama speaks on the economy and comprehensive plan for financial regulations in the East Room at the White House in Washington, D.C. (Jewel Samad/AFP/Getty Images)
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Tess Vigeland: Let's not leave the banks just yet. Today the industry announced it will oppose the Obama administration's efforts to create a new agency to regulate financial products like mortgages and checking accounts. But how can they stop it when they're still on the government dole? Marketplace's Steve Henn reports.
STEVE HENN: In the first three months of 2009, financial services firms and their representatives in Washington spent $110 million on lobbying. But as big as that number is, it's less than last year.
DAVE LEVINTHAL: Well, they still are among the leaders and that really hasn't changed.
Dave Levinthal is at the Center for Responsive Politics. He says lobbying is only one way to reach lawmakers and when it comes to political contributions...
LEVINTHAL: They are right on top with $20 plus million. A number that is only going to grow as we get closer and closer to midterm elections.
But some big industry lobbying associations like the mortgage bankers are hurting, even laying off staff. Scott Talbott is at the Financial Services Roundtable.
SCOTT TALBOTT: Banks, financial institutions, like everybody else, are suffering under this economy and so as a result belts are worn a little bit tighter and cuts have to be made.
Talbott says this will make the fight against a financial consumer protection agency even harder.
TALBOTT: If you say you are against this consumer protection regulator, then people will incorrectly assume that you are against protecting consumers. There is a political will to get this done. So it's going to be an uphill battle to stop it altogether.
But all this doesn't mean bank lobbyists are giving up or that they are powerless. The industry's strategy is simple: They'll try to hold together Republican opposition to this idea in the House and Senate. And then they'll attempt to pick off a few Democrats by offering to strengthen consumer protections that already exists.
They'll also argue that creating a new financial product safety commission would just add a new layer of bureaucracy.
In Washington, I'm Steve Henn for Marketplace.
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