Proposed federal agency has consumer groups, chambers at odds

In the shadow of the health care reform controversy, President Obama's legislation to create a federal agency to oversee financial companies and their loan products sold to consumers is creating its own spark this week.

Community roundtables - one in Aurora held Monday and another in Palatine today - are the only two such meetings nationwide touting the benefits and pushing for the passage of the Consumer Financial Protection Agency Act. Hearings on House resolution 3126 are expected in early October.

Already, state and local officials and consumer groups have clashed with business chambers over the necessity of even creating this federal agency. Chambers believe it's just another regulatory arm and an addition to a growing bureaucracy. Consumer groups believe the new agency could provide stronger protections nationwide for those who seek mortgages and other loans, such as high-interest payday loans and certain credit cards.

"The new agency would be a clearinghouse for financial services," said Jen Hall De Kock, the Illinois spokeswoman for Washington, D.C.,-based Americans for Financial Reform. She was contracted by Citizen Action/Illinois to organize the two suburban events with co-host, Chicago-based Woodstock Institute.

She said the new agency would oversee how finance companies advertise to consumers and help monitor activities related to mortgages, loans and the use of credit instruments to avert any other catastrophes, such as the foreclosure crisis that has rippled throughout the economy.

The two meetings were held purposely in Aurora, in Congressman Bill Foster's home turf, and in Palatine, in Congresswoman Melissa Bean holds court. Both Democrats, Foster, of Geneva, and Bean, of Barrington, are on the House Finance Committee and could be instrumental on how the legislation is shaped, De Kock said.

In fact, consumers are welcome to today's round-table at 11 a.m. at the Countryside Unitarian Universalist Church, 1025 N. Smith St., Palatine.

Still, a new federal agency would put untold burdens on all finance companies, including small businesses that offer simple loans, said Douglas Whitley, CEO of the Illinois State Chamber of Commerce.

"My first reaction was concern that they want to create another bureaucracy with thousands of employees," Whitley said. "We don't even know the breadth and reach of such an agency."

The expense and added red tape are the last things that consumers need, Whitley said.

"We'd rather see no such agency at all," he said. "After all, how big do we want the federal government to become?"

With Americans still hurting from the foreclosure crisis and now facing tighter restrictions on other loans, 23 state attorneys general believe the new agency would fill a void for consumers. Illinois Attorney General Lisa Madigan, who spoke at the Aurora meeting supported the measure.

"The current crisis was caused, in part, by inaction on the federal level; we cannot afford to repeat that mistake," said Madigan's spokeswoman Natalie Bauer. "We must use this crisis as an opportunity to create a federal and state partnership to protect consumers."