WASHINGTON (Reuters) - President Barack Obama said on Saturday he is “ready to fight” for a tough new agency to protect consumers from risky loans and other financial products and lashed out at groups that might stand in the way.
“These interests argue against reform even as millions of people are facing the consequences of this crisis in their own lives,” Obama said in a weekly radio address.
“These interests defend business-as-usual even though we know that it was business-as-usual that allowed this crisis to take place.”
Obama said opponents were already “mobilizing” against his proposal earlier this week to create a new Consumer Financial Protection Agency as part of the most sweeping set of financial regulatory reforms since the 1930s.
The new agency, which Congress would have to approve, would have the power to write rules and design or ban financial products. It could also examine firms and impose fines and other penalties on almost any institution that offers products such as home loans or credit cards.
Critics argue that the new agency would stifle financial product innovation, boost the cost of regulatory compliance and cause prices for consumers to rise.
“It’s going to create exactly the type of duplication, second-guessing and layering that we feared,” David Hirschman, president of the U.S. Chamber of Commerce’s Center for Capital Markets, said earlier this week.
Obama said the proposed agency was badly needed to help consumers make sense of complex financial instruments and to keep loan companies honest.
“Today, folks signing up for a mortgage, student loan, or credit card face a bewildering array of incomprehensible options. Companies compete not by offering better products, but more complicated ones -- with more fine print and hidden terms,” Obama said.
“The American people sent me to Washington to stand up for their interests. And while I‘m not spoiling for a fight, I‘m ready for one.”
Senior lawmakers have said they expect to pass financial reform regulation by the end of the year.
Treasury Secretary Timothy Geithner, at a Senate hearing on Thursday, faced the most opposition to Obama’s proposal to give the Federal Reserve new powers to police broad risks in the economy.
Some lawmakers believe the central bank failed to halt practices that led to the global financial crisis.
Giving the Federal Reserve more authority “is like a parent giving his son a bigger, faster car right after he crashed the family station wagon,” said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.
Reporting by Doug Palmer; editing by Chris Wilson