WASHINGTON (AP) -- The Obama administration went on the attack Wednesday against the country's biggest business lobby over resistance to an overhaul of the financial rules system.
Deputy Treasury Secretary Neal Wolin told the U.S. Chamber of Commerce on its own turf that a reworking of the financial system was sorely needed and that the attempted obstruction by Chamber was misguided.
Wolin was brutal in his remarks -- as the Wall Street Journal noted: "Wolin brought his own lunch to the U.S. Chamber of Commerce -- a knuckle sandwich."
While members of the chambers sat at nearby tables, Wolin attacked the Chamber's lobbying and advertising campaign against financial regulatory reform, calling them misleading, dishonest and "backward," notes the WSJ, even invoking the Tea Party movement at one point: "As the Tea Party folks might say, 'Read the bill.'"
Here is part of Wolin's attack:
That is why it is so puzzling that, despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it. That campaign is not designed to improve the House and Senate bills. It is designed to defeat them. It is designed to delay reform until the memory of the crisis fades and the political will for change dies out.
The Chamber's campaign comes on top of the $1.4 million per day already being spent on lobbying and campaign contributions by big banks and Wall Street financial firms. There are four financial lobbyists for every member of Congress.
All told, it is one of the most expensive special interest campaigns in history.
We believe that the fight against financial reform is shortsighted and misguided.
Wolin was particularly upset with the Chamber's attack on the proposed consumer financial protection agency, citing the Chamber's Website, StopTheCFPA.com, which has been the first Google ad to show up in an online search for "CFPA".
The Chamber's website says that the consumer agency would be a "massive new government agency." It will be a new agency. But it will not be massive. And it will simplify and replace - not duplicate - the existing approach to consumer financial protection regulation.
Where today seven agencies overlap in a confusing, duplicative but ineffective way, there would be one dedicated agency - consolidating authorities, eliminating redundancy, and streamlining regulation. That's not more government. That's better government.
In addition, the consumer agency will have the explicit duty to reduce regulatory burden - for example, by combining competing mortgage disclosures under two different laws, administered by two different agencies, into one, simple, clear form.
The Chamber's website claims that we seek to create an agency with authority that "extends far beyond traditional financial services products to a vast majority of the economy." Opponents have painted a terrifying picture where every corner store is subject to the long arm of the consumer financial regulator.
Again, that is not true.
The legislative language of the bill voted out of the Senate Banking Committee is very clear: "the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority under this title with respect to a merchant, retailer, or seller of nonfinancial goods or services that is not engaged significantly in offering or providing consumer financial products or services."
Lastly, he lashed out at arguments made by CFPA opponents that the proposed agency's focus on consumer protection might harm the safety and soundness of banks:
Finally, let me address one other argument - the argument that, by separating consumer protection authority from safety and soundness authority, we will put banks at risk.
We reject the notion that demanding responsibility, fairness and transparency in consumer financial markets is somehow at odds with "safety and soundness." The crisis demonstrated clearly that unscrupulous lending is no better for banks than it is for their customers.
No doubt, bank regulators will sometimes disagree with consumer regulators. But inter-agency disagreements are nothing new. And in fact, both the House and Senate bills provide clearer mechanisms to resolving potential conflicts between consumer and bank regulators than currently exist for resolving conflicts between the various regulatory agencies today.
The idea that we have to choose between, on the one hand, protecting families and small businesses against unfair and deceptive practices and, on the other hand, keeping banks safe and sound is - quite simply - a false choice. We can do both. And we'll do both better if we dedicate different regulators to these different jobs, with mechanisms to ensure coordination.
READ the whole speech here.
The WSJ notes that after the speech, Chamber chief executive Thomas Donohue stood up and called it a "bit of a political speech" and defended the group's criticism by emphasizing that "the constitution is very clear on our right to raise our issues."
The Chamber released its own statement after the event in response to Wolin's broadside. READ it below:
U.S. Chamber of Commerce Executive Vice President Bruce Josten today responded to remarks by Deputy Treasury Secretary Neal Wolin that politicized the debate on financial regulatory reform and distorted the facts.
"The U.S. Chamber is committed to a bipartisan effort to modernize and strengthen our broken regulatory system, restore investor confidence, and get Main Street America back to work," said Josten. "Despite the political grandstanding and distortion of facts today by Secretary Wolin, the U.S. Chamber of Commerce is in lockstep agreement with the Deputy Secretary on one point: facts do matter."
According to the Chamber,
1) Fiction The Deputy Secretary suggested that Chamber efforts were "not designed to improve" the financial overhaul bills. Fact: The Chamber has made every effort to be a constructive participant in the discussions, including in December of 2009 (https://www.uschamber.com/assets/ccmc/cfpc.pdf) when we offered a proposal for creating a Consumer Protection Council to ensure coordination of regulatory and enforcement actions among the federal financial regulators. Without creating a massive new bureaucracy, this Council would ensure that regulatory gaps are eliminated, prescribe consistent disclosure and examination standards, and identify areas in which new regulations are necessary.
2) Fiction: The Secretary erroneously stated that the House bill's language would not dictate and require "plain vanilla" products. Fact: An explicit "plain vanilla" provision was included in the original House bill, and was dropped in name only from subsequent legislation. However, the broad rule-writing authority coupled with vague regulatory standards would continue to give the new regulator the ability to steer the market towards standardization and "plain vanilla" products. The effect therefore on consumers, small businesses, and small financial institutions will be the same - less competition, a reduction in the availability of and choice among credit products, and disadvantages for smaller financial institutions.
3) Fiction: On the bill's scope, Wolin wrongfully stated that the Chamber falsely claims that the new agency would have authority to "extend far beyond traditional financial services products to a vast majority of the economy." Fact: The Consumer Financial Protection Agency's unprecedented authority does not stop at banks and other providers of financial products. For example, if you are a merchant, retailer or nonfinancial provider of goods and services that extends credit and the credit is 1.) subject to a finance charge, or 2.) payable in more than 4 installments, you can be subject to the CFPA. (See Dodd Bill: Section 1027(a)(2)(B)(iii)).
"The facts are the facts," Josten said. "The draft Senate bill will give the CFPA very broad and unchecked government authority to write its own rules without oversight by Congress, the President, or the Federal Reserve. It will give unelected federal bureaucrats unprecedented power over Main Street businesses, dictating financial products for a broad swatch of Americans. Our goal is to achieve financial regulatory reform that provides clear consumer protections and a 21st century system that will allow businesses to create jobs and strengthen our economy."