Wednesday, July 1, 2009 4:43 PM

Opposition Builds to Consumer Finance Agency

A few dozen banks, consumer finance companies, mortgage companies and other large lenders have been meeting under the auspices of the American Financial Services Association to discuss forming a coalition to fight an Obama administration proposal for creating a new consumer financial protection agency with a large regulatory mandate.

"I think everybody around the table understands the urgency of the challenge we face," said Bill Himpler, the top lobbyist for the AFSA which has about 350 members including a number of consumer finance companies that provide 50 percent of the nation's non-mortgage loans.

Himpler added that the groups stand "shoulder to shoulder in terms of wanting consumer protections, but this is not it." Some of the groups fear that the new agency's purview would be too sweeping and would also take away some regulatory powers that now reside with the Federal Reserve, the Comptroller of the Currency and the Federal Deposit Insurance Corporation.

The groups met again today at the offices of Toyota, which has a large finance arm, to try to develop a strategy that's likely going to include hiring outside consultants to craft their message and possibly run some advertising. Yesterday, the White House unveiled a 150- page proposal to create a new regulatory agency whose powers could include limiting or barring risky loans, enforcing new laws to protect credit card consumers and setting standards for mortgage lending. The new proposal has drawn considerable support from consumer organizations and liberal groups.

The proposal has ignited a firestorm of opposition from such big players as the American Bankers Association and it is already generating sizable lobbying activity. The House Financial Services Committee, whose chairman Rep. Barney Frank, D-Mass., backs creating a new consumer protection agency, is preparing to hold hearings on the idea this month.