Senate Banking Committee Chairman Chris Dodd (D-Conn), has refuted claimsby the U.S. Chamber of Commerce and Senate Republicans that a proposedConsumer Financial Protection Agency (CFPA) being considered as part ofbanking-reform legislation would subject small businesses such asorthodontists to new costs and oversight. The legislation being debatedby Congress is aimed at preventing a recurrence of the banking crisisthat crippled the nation’s financial system in 2008.
According to the Chamber, the new agency would haveauthority to regulate a significant portion of the businesscommunity—including nonfinancial businesses that had nothing to do withthe economic crisis and little to do with consumer finance. Evenorthodontists and others that allow their customers to pay over timecould find themselves subject to new and costly regulations, the Chamberclaims.
"The bill also creates a new, all-powerful super bureaucracy," saidSenator David Vitter (R-La). "It subjects any business that acceptsmore than four installment payments to the [CFPA]. That’s not justGoldman Sachs; that’s not just Citigroup; that’s my familyorthodontist."
Dodd countered that this is a misrepresentationof Democrats’ efforts "to bring accountability to Wall Street."
"[On Wednesday] the Republican Leader came to the Senate floor andrepeated the Wall Street lobbyist claim that somehow the new consumerprotection bureau would bring new regulation to orthodontists and otherswho simply allow customers to pay over time," Dodd said. "This newBureau will protect consumers from abusive financial products andservices like the outrageous practices we’ve seen by credit cardcompanies, or the subprime mortgages that left millions in foreclosureand fueled the economic crisis."
Dodd contended that the new agency would not cover orthodontists orother small businesses where extending a line of credit is incidental totheir business.
"If your orthodontist, or doctor, or dentist lets you pay your bill overa series of months, they’re not covered…." Dodd said. "If you arejust a business that has a loan process out there—one that is not yourprimary business—you’re not covered by the consumer-protection bureau. Now, if you have a store credit card, that credit card falls under thesame rules and regulations as a bank credit card," he added.
