04/12/2010 05:12 am ET | Updated May 25, 2011

Credit, the CFPA, and Recovery

Everyone agrees that enhancing consumer protection is important; even more important is doing it in a way that fixes legitimate shortcomings in our financial system and does not cause financial harm to our consumers and small businesses.

The House has passed, and the Senate is preparing to move on, legislation to create a massive new government agency to regulate consumer financial products. This new agency, the Consumer Financial Protection Agency (CFPA) would have unprecedented powers and authority to determine the types of financial products consumers can choose from. In fact, the bill extends far beyond traditional financial services products to a vast majority of the economy - in short creating a new regulatory overlay much of the business community.

The U.S. Chamber supports strengthening consumer protection to ensure consumers have access to clear and concise disclosures about risks posed by financial products, fill regulatory gaps where they exist and pursue tough-as-nails enforcement against fraudulent and predatory actors. That's the right way.

Adding more bureaucracy and duplication on top of seven existing federal agencies, restricting consumer access and choice, and overreaching to regulate businesses that are not engaged in consumer finance is the wrong way.

The CFPA would:

...establish authority far beyond traditional financial services products to a vast segment of the economy. Advertisers, utilities, lawyers, educational institutions, tech companies and a host of other companies could be regulated just because of the way they bill customers, or even if they are just vendors to financial firms that offer consumer products. a critical time in our economic recovery restrict access to credit and limit consumer choice. Products could be deemed illegal after they're already been in the marketplace even if there were no rules on the books prohibiting them. The penalties for guessing wrong on vague standards would be so great that financial institutions would likely stop offering many products.

...expand 51 State agencies who will create conflicting consumer standards and duplicative regulations. Businesses would face a maze of confusing and overlapping edicts from State attorneys general, who incidentally would be allowed to sub-contract their responsibilities to their allies and campaign contributors in the plaintiffs' bar.

...separate the regulation of financial products from the regulation of the financial institutions themselves; this would actually impair the ability of regulators to monitor the health of our financial institutions and undermine the safety and soundness of our banking system.

It's time for Congress and the Administration to work together to enact meaningful, bipartisan solutions to modernize financial regulation. Working together, we can protect consumers, expand credit to Americas job creators, and help our economic recovery. If we simply add new layers of bureaucracy in the name of punishing banks, the ultimate price will be paid by -- you guessed it -- consumers and small businesses.