March 17, 2010 / 10:33 PM / 10 years ago

White House rips business lobby over financial reform

WASHINGTON (Reuters) - The White House lashed out at a major U.S. business lobbying organization on Wednesday for spending millions of dollars to fight legislation that would overhaul regulation of Wall Street firms.

Senator Christopher Dodd, a Democrat, unveiled a bill earlier this week that would give the Federal Reserve the power to break up big firms that could threaten the stability of the financial system if they suffered serious problems.

The Fed would also gain authority over the nation’s largest bank-holding companies and become the home to a new consumer watchdog with oversight on mortgage-related businesses and some large non-bank financial companies, such as insurers.

Jen Psaki, deputy communications director at the White House, criticized the Chamber of Commerce for putting resources into opposing the bill.

“Just yesterday we learned that the U.S. Chamber of Commerce, no stranger to fighting for the status quo, plans to launch a $3 million ad campaign aimed at bringing down the much needed reforms of our financial system,” Psaki wrote in a blog posted on the White House website.

“That’s $3 million to fight a bill that will protect American families by establishing a consumer financial protection agency that will bring transparency, stronger supervision and clear rules of the road to our financial system,” she wrote.

The Chamber argues that an independent watchdog for consumers would make it harder for businesses to get credit.

“The Chamber will continue to oppose a new independent consumer financial regulator that will reduce access to credit for businesses and consumers, the federalization of corporate governance, and a permanent bailout fund,” the group said in a statement on its website released earlier this week.

“The Chamber will also work to support greater transparency for over the counter derivatives without jeopardizing the ability of business end users to effectively manage their risks,” it said.

A Chamber spokesman did not respond immediately to a request for comment on the White House’s criticism on Wednesday.

Reporting by Jeff Mason; editing by Mohammad Zargham

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