If President Obama has his way, businesses that rely on predatory and deceptive lending practices will soon have to straighten up or face federal fines and other punitive action. In his weekly radio address, Barack Obama defended his proposed Consumer Financial Protection Agency, saying that the new government office is needed to crack down on the types of business practices that led to the economic crisis.
The proposed agency comes as part of the Obama administration’s overhaul of federal regulations governing the financial sector.
“It’s no coincidence that the lack of strong consumer protections led to abuses against consumers,” President Obama said in his weekly radio address. “The lack of rules to stop deceptive lending practices led to abuses against borrowers,” he said.
Last month, Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act into law, adding regulations to the credit industry that will outlaw unreasonable rate increases and abusive fees and penalties.
One of the proposed agency’s roles would involve enforcing the new rules set forth in the new bill. The agency would also crack down on the unfair binding arbitration clauses, which force consumers to give up many of their legal rights as a precondition to doing business with credit card companies. Such clauses are almost always contained within the microscopic print of credit card contracts.
“This agency will have the power to set standards so that companies compete by offering innovative products that consumers actually want — and actually understand,” President Obama said.
“Those ridiculous contracts with pages of fine print that no one can figure out — those things will be a thing of the past. And enforcement will be the rule, not the exception.” Obama said.
Consumer-friendly measures taken by the Obama administration recently have cut through the status quo and special interests in a rapid, if not brusque, manner.
“Some argue that these changes — and many others we called for — go too far,” Obama said. “And I welcome a debate about how we can make sure our regulations work for businesses and consumers. But what I will not accept, and I will vigorously oppose, are those who do not argue in good faith. Those who would defend the status quo at any cost.”