Consumer watchdog agency may get lost in the shuffle

President Obama’s focus, we’re now told, is on jobs, jobs, jobs. That’s nifty, but it doesn’t bode well for other big-ticket policy goals, such as creation of a Consumer Financial Protection Agency to safeguard us from abusive bank practices.

That idea, which Obama championed and leading Democratic lawmakers embraced, is now expected to be a long shot thanks to ferocious opposition by the banking industry, which says no additional regulatory oversight is needed.

No? Here’s an economic statistic that suggests otherwise:

The number of credit card solicitations mailed to consumers rose during the last three months of 2009 for the first time in three years, according to Mintel Comperemedia, a Chicago market-research firm. Total come-ons from credit card issuers jumped 47% from the previous three-month period, Mintel found -- a sign that banks believe the economy is recovering and that the time is ripe to start wooing consumers again with offers of easy credit.

Capital One was busiest on that score, with its solicitations more than tripling from the previous quarter, according to Mintel. Chase bank boosted its mailings by 152%, followed by U.S. Bank (93%), HSBC (90%), American Express (67%) and Discover (36%).

“There’s some cautious optimism among issuers, even though unemployment is still very high,� said Andrew Davidson, Mintel’s senior vice president.

He said the total number of solicitations reached almost 2 billion last year, or about six for every man, woman and child in the country. “It will certainly be higher this year,� Davidson predicted.

Another round of regulatory changes for the credit card industry takes effect this month. Card issuers will be limited in how much they can raise people’s rates and will be required to more clearly disclose changes to contract terms.

It’s estimated that the tougher rules could cost banks as much as $50 billion in lost revenue. In response, many institutions have recently boosted fees for plastic and checking accounts.

Citigroup had said fees would be introduced this week for about 1 million free checking customers. But New York Atty. Gen. Andrew Cuomo said Monday that Citi would shelve the plan after his office raised questions about the legality of the move.

It’s telling that it took a public prosecutor, rather than a regulatory agency such as the Federal Reserve, to stand up for consumers. Regulators have their hands full dealing with other economic and financial matters.

A Consumer Financial Protection Agency would focus solely on looking after the interests of ordinary people. That’s all it would do.

And judging by the myriad ways that banks such as Citi have tried to strong-arm customers in recent years, you’d think it would be evident to all that creation of such an agency is warranted.

Republican pollster Frank Luntz, for one, isn’t taking any chances. Last month he sent clients a memo titled “The Language of Financial Reform.� It offers talking points to bankers and their political allies for torpedoing a Consumer Financial Protection Agency. In a nutshell, it advises opponents of the agency to play on people’s distrust of politicians and government bureaucrats.

Here’s some suggested verbiage from the memo under the heading “Words That Work�:

“We don’t need another federal government agency. We don’t need bigger government. What we need is a better approach that promotes accountability, responsibility and effective oversight.�

Luntz also advises agency critics to say that “the architects of failure are now designing the rescue.�

With spin like that, who needs actual policy?

“Do not underestimate the hostility that the American people have toward Washington,� Luntz told me. “The American people don’t want new regulation and new legislation. They don’t want another Washington bureaucracy.�

Well, when you put it like that, it does sound like toenail fungus.

There’s a word for what Luntz is doing: misdirection. It’s how magicians get you to look another way as they fool you.

The problem here isn’t official bureaucracy. The problem is a banking industry that has proved itself unworthy of customers’ trust -- and that is fighting as hard as it can to keep things just as they are.

Is that what the American people want? If you put it to them straight, I suspect most folk would say that banks don’t play fair and could use more parental supervision.

A Consumer Financial Protection Agency was a good idea. While it lasted.

Programming note

Beginning next week, this column moves to the Monday and Thursday papers.

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