The US Chamber of Commerce is opposing the administration’s proposed Consumer Financial Protection Agency, on the grounds that it would hurt small business. Their argument is that this agency will extend the dead hand of government into every small business.
For the Chamber of Commerce, government is the enemy of small business and should always and everywhere be fought to a standstill. Chamber Senior Vice President (and former Fred Thompson campaign manager) Tom Collamore sees this as “advocacy on behalf of small businesses, job creators, and entrepreneurs” (quoted in the WSJ link above), and the Chamber has launched the “American Free Enterprise” campaign.
Somewhere, the Chamber’s senior leadership missed the plot. What brought on the greatest financial crisis since the 1930s? What has hurt, directly and indirectly, small business of all kinds to an unprecedented degree over the past 12 months? What is killing small and medium-sized banks at a rate not seen in nearly 80 years?
It’s the behavior of the financial sector, particularly big banks and their close allies – by consistently mistreating consumers. And the letter and spirit of the regulatory regime let them get away with it.
Some members of Congress honestly believe that consumers should have a free choice, unfettered by any kind of restriction, regarding the financial products they buy.
But spend time talking to any marketing professional or call them to testify before your committee – or just ask Mr. Collamore, who was previously at Altria. The state of knowledge regarding how to persuade people to buy stuff is impressive, the degree of potential manipulation for consumer preferences is simply stunning, and the “innovations” in this area are not slowing down.
The scope for taking advantage of consumers in subtle ways, or outright duping them, is probably higher for finance than for any other sector. For fairly obvious reasons, people are more likely to misunderstand credit than, say, furniture. Ambitious executives have therefore hammered hard on borrowers. And the implications – as you have seen and are still seeing – of systemic financial misbehavior are awful in terms of human impact and essentially without limit in terms of ultimate macroeconomic downside.
Unscrupulous Finance has brought us down and will do it again. Those most damaged now and in the future include small and medium-sized business owners who are trying to treat customers fairly.
The Chamber of Commerce is fighting the last war (or the one before that). Their small business membership should wake up to the current reality and press the Chamber hard to change its position before it is too late.
President Obama needs to go over the heads of the Chamber’s leadership, reaching out to and running ads directly targeted at its small business membership. The White House has to tackle this head on, framing the issue clearly for people with the help of very clear TV and radio ads. The Chamber of Commerce is arguing that unfettered finance is good for small business. They are wrong.
That’s like saying our existing Consumer Product Safety Commission is bad for Walmart and other retail businesses because of government’s heavy-handed limitations on what they can sell…like toys with lead in them.
Daniel Habtemariam
Amen. What the rabid right seems to have forgotten is that Caveat Emptor is an awful customer service model. Yet every day we read or hear story after story about how this product isn’t safe or the FDA doesn’t require testing for e-Coli bacteria in hamburger meat (imagine not testing for bacteria in meat combined from thousands of cows across hudreds of slaugherhouses). It’s not just out of financial hardship that consumers will stop spending – and stop investing. It’s out of fear for their lives or their savings. How much money will Wall Street make if everyone goes back to buying CDs from their local banks? Great for the banks, but for Wall Street?
Nobody trusts companies to deliver safe products anymore. Companies at this point ought to be begging for more testing and more regulation, but they’re too dumb and short-sighted to do that.
Maybe when we revisit 1937 they’ll start thinking more progressively. Or, more likely, their political power will be gone and they won’t have a choice.
I think the difference between now and 1937 is that the public overwhelmingly started thinking more progressively back then and voted out the right-wing politicians who obstructed them. Money was less of an issue in politics, and there were no right-wing propaganda networks to brainwash the public. As a result, we had Teddy Roosevelt’s trust-busting tirades and Franklin Roosevelt championing the FDIC and Glass-Steagall.
Banks should not be in the stock market at all, and should exist only upon their lending of money to business or individuals backed by conventional loan reserves. As soon as bankers had the ability to invest in the market, their interest in short-term gain overrode all else. Greed won, and will always win.
We’re growing more and more into a crisis-driven country. It takes a lot for us to act…