There are many points in Susan Antilla’s article that I agree with. Namely that a consumer financial protection agency is needed. However, one key argument seems understated. Financial institutions are lobbying for protecting profits. And the core of their argument is that the economy will be hurt by any reduction of credit. Well the economy entered its ruinous state thanks to an excess of credit. Politicians should ignore arguments grounded in the notion that more credit is always good.
When government performs its key role, the rules businesses play by are set. The CFPA, as largely proposed would level the playing field by requiring that financial institutions provide consumers with clear information. The ultimate effect would be that consumers use lower levels of leverage than if the banks could swindle some. Of course there are less profits, and economic activity when there is a lower multiplier for money. It’s an accepted reality of economic activity—consumers increase default rates when money is easily available. Why? Greed exist and unconstrained it corrupts capitalism by destroying the factors that create balance in the economic system.