It has been said a dozen times that this administration would be the most regulatory and economically destructive since Carter, and by now people should realize that that is no exaggeration. From the first peek of the 2009 and 2010 budgets we were able to see the immediate and dramatic increase in funding to regulatory agencies for adding new regulations, monitors and enforcers. That not being enough for the Obama administration, he’s adding yet another regulatory agency, the Consumer Financial Protection Agency (CFPA).
A centerpiece of the Obama administration’s effort to overhaul supervision of financial markets will be a new Consumer Financial Protection Agency that “will be charged with protecting consumers in credit, savings and payment markets,” according to an administration document describing the proposed agency.
The agency would have the power to “reform” the country’s mortgage rules, among other things.
It is unclear what the Obama administration intends this agency to protect investors and consumers from, other than themselves. The SEC already exists to protect the market whole from fraud and abuse. It seems like not only overkill but moreover a power grab to create yet another financial regulatory body… Especially given the suspicious reasoning of “protecting” consumers.
The consumer protection agency would have the power to “regulate all providers” of consumer credit products and services, including the power to examine firms, enforce rules, and levy fines.
Having the power to “regulate all providers” reeks of power grabbing. Which, as has been presciently stated a dozen times, is the primary mission of the current administration. Naysayers, still in denial, have thus far refused to see the writing on the wall. However, as the administration gains more and more power over the financial cogs in the economic engine, it is only a matter of time before they realize that when the executive controls all of the cogs, they control the engine… and thus the vehicle itself.
What other cause could there possibly be for the takeover in the auto industry, the levying of state economies through the stimulus package, the bank takeovers, granting more power to the Federal Reserve, regulating pay for financial firms, adding more regulation for credit card companies, and now adding in a new regulator – a kind of SEC for consumer credit – with a wide scope of power?
The agency would be able to “ban unfair terms and practices or place tailored restrictions on product terms and provider practices, if the benefits outweigh the costs,”
For example, the agency would be allowed to enforce fair lending laws and the Community Reinvestment Act, which bank regulators previously were charged with doing. The agency would also “ensure that compensation practices do not create conflicts of interest between intermediaries and consumers.”
Any guesses as to who determines what practices and terms are unfair? The Executive branch… Not Congress. From the same man who decried the supposed expansion of executive power under the Bush administration. Ironically, as the president decried it – and continues to do so – he has expanded the executive reach, scope and power in a manner unprecedented to date.
The difference here, is that Obama does it in the interest of “protecting” the people and creating “fairness” from what he sees as unfair. This brings us back to the CRA – which the CFPA will be enforcing. This is the same CRA that precipitated and directly contributed to the housing bubble and subsequent market meltdown. Like many other liberal policies, tried and failed, will be tried and tried again – with deeper investment each time.
There is also the tell-tale line “ensure that compensation practices do not create conflicts of interest between intermediaries and consumers.” In keeping with the president’s agenda and mantra for “fair” compensation and the government regulation of it.
President Obama has time and again repeated that he neither wants himself nor the government taking over markets, businesses, and the economy, citing that he already has enough on his “plate.” Yet as each new day dawns he finds more and more ways to do just that. The mentality seems to be a spin of an older adage: A regulator a day, keeps the boogie men at bay.