"The great achievements of civilization have not come from government bureaus."  -Milton Friedman

BACKGROUND:

On December 11, 2009, House Democrats, without any Republican support, voted to approve TARP II, H.R. 4173.  In addition to making Wall Street bailouts permanent, TARP II would expand the size of the federal government by creating a powerful and costly anti-consumer agency ironically called the Consumer Financial Protection Agency.  The anti-consumer agency would be empowered to determine the types and costs of all financial products and services to be offered to consumers, putting bureaucrats and red tape between consumers and the credit products and services they need.  Despite some industries' efforts to get exemptions, the agency's reach would be unprecedented as it could still regulate any product, service or entity it deems appropriate.  On March 24, 2010, U.S. Chamber of Commerce Executive Vice President, Bruce Josten, representing over three million businesses across the nation, stated, "[T]he broad rule-writing authority coupled with vague regulatory standards would continue to give the new regulator the ability to steer the market towards standardization...The effect therefore on consumers, small businesses, and small financial institutions will be the same-less competition, a reduction in the availability of and choice among credit products..." 

The Senate's TARP II plan would create the Consumer Financial Protection Bureau (the Bureau).  The Bureau would be an independent agency, but housed in the Federal Reserve.  The Bureau would rely on the Fed and fees from covered entities for its funding.  The Bureau would also be headed by a single unelected "credit czar."  Like the CFPA, the Bureau would be empowered to determine the types and costs of all financial products and services to be offered.  Its reach is also unlimited.  Regarding the Bureau, the Chamber's Josten stated, "It [the Senate bill] will give unelected federal bureaucrats unprecedented power over Main Street businesses, dictating financial products for a broad swatch of Americans." 

ISSUES OF CONCERN:

Platform for Political Elitism:  On April 19, 2010, the Associated Press reported, "Public confidence in government is at one of the lowest points in a half century, according to a survey from the Pew Research Center.  Nearly 8 in 10 Americans say they don't trust the federal government and have little faith it can solve America's ills, the survey found."  Yet, rather than focusing on creating private sector jobs, both Democrat proposals would violate the fundamental principle of equality by elevating elitists, and allowing them to make decisions for consumers and business owners. 

Ignoring the American People:  Like the unpopular government takeover of healthcare, the Democrats, once again, are arrogantly ignoring the will of the American public.  On March 24, 2010, Bloomberg, reported, "Americans are leery about creating a new federal agency to make consumer-protection rules for mortgages and credit cards and would prefer to enhance the existing powers of banking regulators...Almost 7 out of 10 people surveyed support using current bank regulators for consumer protection, backing positions held by the financial industry and Republicans over President Barack Obama's proposal to establish an independent agency." 

Empowers the Government:  The CFPA and the Bureau would allow a few unelected government bureaucrats to regulate large segments of the financial marketplace.  From merchants with layaway programs to mortgage lenders, the CFPA would have the authority to regulate any activity it defined as a "financial activity."  The Bureau would be empowered to regulate any person it defines as being "significantly" engaged in offering or providing financial products or services.  Such broad government authorities will diminish consumer choices.  Reducing consumer options will lead directly to higher consumer prices and less individual freedom in the marketplace.