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President Obama discusses the new Consumer Financial Protection Agency and why it is necessary.
The Consumer Financial Protection Agency will have the sole job of looking out for the financial interests of ordinary Americans by banning unfair practices and enforcing the rules. This is the type of reform that will attack the causes of the current crisis and prevent further crises from taking place.
TRANSCRIPT:
Prepared Remarks of President Barack Obama
Weekly Address
June 20, 2009As we continue to recover from an historic economic crisis, it is clear to everyone that one of its major causes was a breakdown in oversight that led to widespread abuses in the financial system. An epidemic of irresponsibility took hold from Wall Street to Washington to Main Street. And the consequences have been disastrous. Millions of Americans have seen their life savings erode; families have been devastated by job losses; businesses large and small have closed their doors.
In response, this week, my administration proposed a set of major reforms to the rules that govern our financial system; to attack the causes of this crisis and to prevent future crises from taking place; to ensure that our markets can work fairly and freely for businesses and consumers alike.
We are going to promote markets that work for those who play by the rules. We’re going to stand up for a system in which fair dealing and honest competition are the only way to win. We’re going to level the playing field for consumers. And we’re going to have the kinds of rules that encourage innovations that make our economy stronger – not those that allow insiders to exploit its weaknesses for their own gain.
And one of the most important proposals is a new oversight agency called the Consumer Financial Protection Agency. It’s charged with just one job: looking out for the interests of ordinary Americans in the financial system. This is essential, for this crisis may have started on Wall Street. But its impacts have been felt by ordinary Americans who rely on credit cards, home loans, and other financial instruments.
It is true that this crisis was caused in part by Americans who took on too much debt and took out loans they simply could not afford. But there are also millions of Americans who signed contracts they did not always understand offered by lenders who did not always tell the truth. Today, folks signing up for a mortgage, student loan, or credit card face a bewildering array of incomprehensible options. Companies compete not by offering better products, but more complicated ones – with more fine print and hidden terms. It’s no coincidence that the lack of strong consumer protections led to abuses against consumers; the lack of rules to stop deceptive lending practices led to abuses against borrowers.
This new agency will have the responsibility to change that. It will have the power to set tough new rules so that companies compete by offering innovative products that consumers actually want – and actually understand. Those ridiculous contracts – pages of fine print that no one can figure out – will be a thing of the past. You’ll be able to compare products – with descriptions in plain language – to see what is best for you. The most unfair practices will be banned. The rules will be enforced.
Some argue that these changes – and the many others we’ve called for – go too far. And I welcome a debate about how we can make sure our regulations work for businesses and consumers. But what I will not accept – what I will vigorously oppose – are those who do not argue in good faith. Those who would defend the status quo at any cost. Those who put their narrow interests ahead of the interests of ordinary Americans. We’ve already begun to see special interests mobilizing against change.
That’s not surprising. That’s Washington.
For these are interests that have benefited from a system which allowed ordinary Americans to be exploited. These interests argue against reform even as millions of people are facing the consequences of this crisis in their own lives. These interests defend business-as-usual even though we know that it was business-as-usual that allowed this crisis to take place.
Well, the American people did not send me to Washington to give in to the special interests; the American people sent me to Washington to stand up for their interests. And while I’m not spoiling for a fight, I’m ready for one. The most important thing we can do to put this era of irresponsibility in the past is to take responsibility now. That is why my administration will accept no less than real and lasting change to the way business is done – on Wall Street and in Washington. We will do what is necessary to end this crisis – and we will do what it takes to prevent this kind of crisis from ever happening again.
Thank you.
8 Comments
Thanks twolf
We’ll see. Thanks, twolf.
Yeah, time will tell. But money is powerful so my optimism is low.
More golden rhetoric followed up by tarnished action.
“…But what I will not accept – what I will vigorously oppose – are those who do not argue in good faith. Those who would defend the status quo at any cost. Those who put their narrow interests ahead of the interests of ordinary Americans. We’ve already begun to see special interests mobilizing against change.
That’s not surprising. That’s Washington.
For these are interests that have benefited from a system which allowed ordinary Americans to be exploited. These interests argue against reform even as millions of people are facing the consequences of this crisis in their own lives. These interests defend business-as-usual even though we know that it was business-as-usual that allowed this crisis to take place.”
What we have seen is every time those “who do not argue in good faith” start whining, obama and his people roll over and look for a compromise that will give the whiners all they want and leave the rest of us crying. His opponents will never get enough appeasement. We can’t really get anything more than tweaking around the edges. His political capital is being wasted and we will get nothing that we, the majority, wanted. The rethugs won in ‘06 and ‘08, we were just mislead by the numerical results.
Yep.
The banks will be using
theirour bailout money to fight this.What a steaming pile of horseshit. Obama has left the current system of crony capitalism in place, unreformed, with only a few cosmetic smudges for the rubes. And this is supposed to engender “fair dealing” and “honest competition”? What rock has he been living under for the last 30 years? Except of course he hasn’t been. Obama is a willing supporter and defender of the corruption on Wall Street. He believes in it.
This is very Obama. No matter how he tries to massage it, he and his economics team have to include this conservative talking point. To direct attention away from the politicians who allowed this all to fester and the banks that committed massive systemic fraud. As I said this is a common conservative strategy. When denial won’t work, shift to everybody was doing it, it was everyone’s fault.
As for the Consumer Financial Protection Agency, does anyone thing it will have the power to prohibit usurious credit card rates? Me either. As for the housing bubble if it had been around then, I see it playing out like this. The CFPA in 2002 and 2003 would get some reports of unscrupulous lending practices but it would see these as only scattered instances. In 2004 and 2005 when the bubble increased exponentially to its peak, the CFPA would still see no problem. Why? Because most of the loans had low initial interest rates and would not reset to ruinous ones for a couple of years. It would only be in 2006 that red flags would begin to show up. At this point the CFPA might start to look at the problem and by late 2006 it might have concluded that there were problems in the housing market. In early 2007 it might even be ready with some initial regulations to counter some of the more egregious excesses.
Would the CFPA have made a difference? No. The damage was already done back in 2004-2005 and at that point it would not have even been on the CFPA’s screen. The bubble would have built and burst much on the timeline in which it, in fact, did.
The “some” here are the banks. The truth though is that the Obama-Summers-Geithner proposals for regulatory reform are a bad joke. They do not go too far. They don’t go anywhere at all.