The Obama administration went on the attack Wednesday against the country's biggest business lobby over resistance to an overhaul of the financial rules system.
Deputy Treasury Secretary Neal Wolin told the U.S. Chamber of Commerce on its own turf that a reworking of the financial system was sorely needed and that the attempted obstruction by Chamber was misguided.
"... It is so puzzling that despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it," Wolin told a business audience as it lunched beneath chandeliers at the organization's ornate headquarters, a block from the White House.
The Chamber — "funded, no doubt, with a good deal of your money — has launched a lavish, aggressive and misleading campaign to defeat" the new consumer protection agency proposed by the legislation, Wolin said.
He said the Chamber's Web site falsely described the powers of the consumer agency as proposed by the House and Senate bills.
The audience politely applauded at the end of Wolin's remarks. But Thomas Donohue, the Chamber's president and CEO, told him it was "a bit of a political speech."
"We weren't a special interest when we helped you" get the economic stimulus bill through Congress and secure a financial bailout for General Motors, Donohue said. "I think the Constitution is very clear on our right to raise our issues," he said.
Democrats on the Senate Banking Committee sent the legislation to the Senate floor on Monday, 18 months after Wall Street's stunning failures helped plunge the nation into the worst recession since the 1930s.
Contained within the legislation is a blueprint for the biggest overhaul of financial regulations since the New Deal. It would give the government unprecedented powers to split up firms that could threaten the economy and also create a new, independent consumer watchdog.
That proposed agency has become the financial industry's biggest target. It would operate within the Federal Reserve but it would be mostly autonomous.
Banking industry executives say the legislation's author, Banking Committee Chairman Sen. Christopher Dodd, D-Conn., unnecessarily separated the functions of the Fed and other regulators from the consumer agency. The Chamber argues that the watchdog's reach would extend even to small businesses.
Last week, before the Banking Committee acted, the Chamber mounted a $3 million blitz aimed at panel members.
In a counteroffensive, the administration ordered Treasury Secretary Timothy Geithner to make a round of TV appearances, where he signaled that the White House was not in a compromising mood.
Now, with the administration fresh from its epic overhaul of the health care system, it is moving quickly to build momentum on an issue that may be its equal — reshaping the nation's financial rules system.
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