THE CONSUMER FRUSTRATION AND PUNISHMENT AGENCY (CFPA)
The financial regulation bill now hurtling through Congress sets up a Consumer Financial Protection Agency (CFPA) to police lending in America. And, as usual, the liberals have fouled it up.
California Republican Congressman John Campbell (no relation to Tom) points out that the bill would “require anybody who makes a loan of any type or amount to any consumer for any reason to register with” the CFPA and get its approval for “the structure of that loan.” So any bank or store or credit card company or merchant or service provider who offered credit in any form to anyone would have to get advance approval from the CFPA.
Can you imagine the bottleneck? Businesses will be waiting like planes over O’Hare Airport for permission to proceed. Business will stagnate as credit grinds to a halt. In the name of protecting consumers, the Obama Administration will strangle credit in a mass of regulation.
It is one thing to regulate banks. But to impose these requirements on any mattress store that says you don’t have to make any payments for six month or which lends money to consumers is inane and insane.
Republicans are reluctant to oppose this provision because they are intimidated by the name of the agency. The “Consumer Financial Protection Agency” is quite some name and attacking it can be risky politically. (But not when people understand what it will be empowered to do). The business community is crawling all over Washington seeking not its defeat, but carves out to protect their specific business or category of enterprise from the provisions of the legislation. Fearful of antagonizing Obama and the dictatorial Democrats, they hesitate to attack the bill and just hope that they will be exempted from its provisions.
A key reason for the ongoing unemployment is that credit is scarce and, as Congressman Campbell points out, it will become more so when the Treasury pulls back the TARP money from banks, worsening their balance sheets. The CFPA will make credit tighter still.
The reach of the CFPA will be wide. The Chamber of Commerce says that it would cover “any school, business, or nonprofit organization that provides financial literacy education; any software company that creates software to help consumers manage their money; advertising and marketing companies, as long as they provide services relating to financial products and services; lawyers; print and electronic media businesses; and utility companies, doctors, retailers and any other business that extends credit…”
And the legislation gives the agency authority over and “liability exposure to shareholders, directors, officers and even employees of covered institutions.”
When the powers of the CFPA are added to the power to seize any bank or nonbank financial institution (discussed in a recent column) this bill is truly a giant leap toward socialism perhaps even more disturbing than the health care bill’s embrace of socialized medicine.