President Obama adopted a fighting stance against the financial services industry today in his weekly radio address. He promised that his proposed Consumer Financial Protection Agency (CFPA) would protect Americans by banning unfair practices and enforcing strong new consumer protections.
I want to believe. But having studied the details of the president’s plan for financial reform I don’t. The new agency will be an easy target for the financial services industry. The CFPA will lack the clout to enforce real consumer protection. It will find itself on the losing end of a struggle with the truly powerful regulatory institutions like the Federal Reserve whose political power, focus on maximizing indsrty profits to meet safety and soundness concerns and close (incestuous) affinity with the financial services industry will trump efforts at consumer protection.
You can see in the video the President has come out swinging at the industry. It is inspiring rhetoric and it is the right thing to do. The lifespan of his political capital to force consumer protections on the industry is growing short.
But he is swinging wild.
For the past two days I’ve posted blogs detailing my concerns about the inherent weakness of the new consumer protection agency that will make it unable to deliver on the president’s promises.
President Obama has made clear he is not afraid to aggressively challenge the financial service industry to get the reforms he is seeking.
If only the quality of his administration’s reform proposals were worthy of his effort.