I was lucky enough to be invited to attend President Obama's speech at Cooper Union today on financial reform, thanks to the thoughtfullness of Norm Silber of Hofstra. Here's what the President said about the CFPA:
[T]his plan would enact the strongest consumer financial protections ever. This is absolutely necessary. Because this financial crisis wasn't just the result of decisions made in the executive suites on Wall Street; it was also the result of decisions made around kitchen tables across America, by folks taking on mortgages and credit cards and auto loans. And while it's true that many Americans took on financial obligations they knew - or should have known - they could not afford, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print.
And while a few companies made out like bandits by exploiting their customers, our entire economy suffered. Millions of people have lost homes - and tens of millions more have lost value in their homes. Just about every sector of our economy has felt the pain, whether you're paving driveways in Arizona or selling houses in Ohio, doing home repairs in California or using your home equity to start a small business in Florida.
That's why we need to give consumers more protection and power in our financial system. This is not about stifling competition or innovation. Just the opposite: with a dedicated agency setting ground rules and looking out for ordinary people in our financial system, we'll empower consumers with clear and concise information when making financial decisions. Instead of competing to offer confusing products, companies will compete the old-fashioned way: by offering better products. That will mean more choices for consumers, more opportunities for businesses, and more stability in our financial system. And unless your business model depends on bilking people, there is little to fear from these new rules.
The President also spoke about the opposition to the bill. Another excerpt:
We've seen battalions of financial industry lobbyists descending on Capitol Hill, as firms spend millions to influence the outcome of this debate. We've seen misleading arguments and attacks designed not to improve the bill but to weaken or kill it. And we've seen a bipartisan process buckle under the weight of these withering forces, even as we have produced a proposal that is by all accounts a common-sense, reasonable, non-ideological approach to target the root problems that led to the turmoil in our financial sector.
But I believe we can and must put this kind of cynical politics aside.
Later the President quoted from a Time magazine report on bankers' reaction after passage of a reform bill:
"Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed ... would rivet upon their institutions what they considered a monstrous system... Such a system, they felt, would not only rob them of their pride of profession but would reduce all U.S. banking to its lowest level." That appeared in Time Magazine - in June of 1933. The system that caused so much concern and consternation? The Federal Deposit Insurance Corporation - the FDIC - an institution that has successfully secured the deposits of generations of Americans.
Those last two quotes connect to the President's response to claims that the bill will lead to future bailouts. Here's what he said about that:
[W]hat is not legitimate is to suggest that we're enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it's not factually accurate. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. Only with reform can we avoid a similar outcome in the future. A vote for reform is a vote to put a stop to taxpayer-funded bailouts. That's the truth.
Nevertheless, on the way home, I heard Sean Hannity on the radio describing the bill as a bailout bill. And that in turn connects to what the President said about the CFPA, already quoted above: "unless your business model depends on bilking people, there is little to fear from these new rules." Unless your advocacy model depends on misrepresenting the facts, there is little to oppose in this bill.