Posted by Jorden Meltz
Those weren't olive branches President Barack Obama was tossing at the financial industry at the White House on Oct. 9. In an effort to jump-start his faltering proposal for a Consumer Financial Protection Agency, the world's newest Nobel Peace Prize winner lobbed some verbal grenades at industry opponents—particularly the U.S. Chamber of Commerce, which has led the charge—and called for a new push to get his proposal passed.
It's going to be a hard slog. Financial companies are afraid the plan would curtail their marketing of many high-margin products, so the industry is spending a lot of money and effort trying to kill it or water it down. One of the tactics is to refocus the debate around small business owners and the small community banks that serve them.
But now, Frank and the Administration are running into more serious opposition—particularly from a block of moderates known as the New Democrat Coalition—than they expected on two key issues. First is how much enforcement power the new agency would have. While the President wants it to be able to enforce any new rules it sets, the moderates want enforcement powers to remain with existing banking regulators. An even bigger fight is brewing over whether banks would have to comply with state consumer laws when they are stricter than whatever the new federal agency comes up with.
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