President Barack Obama delivered a stern warning on Thursday that he would not allow Republicans to “gut” and “weaken” consumer protection safeguards as Congress debates financial regulatory reform.
Obama did not specifically threaten to veto the bill, the subject of fierce debate in the Senate, but aides made clear Obama would not accept changes to the bill which he believes are designed to water it down.
“Today, the Senate is considering a Republican amendment that will gut consumer protections and is worse than the status quo,” Obama said in a written statement.
“I will not allow amendments like this one written by Wall Street’s lobbyists to pass for reform.”
Obama said the amendment, introduced by senior Republican Senator Richard Shelby, would weaken consumer protection oversight, include “dangerous carve outs for payday lenders” and other financial services operations.
Payday loans tide a borrower over until they get their monthly salary check, but often come with very high, or confusing interest rates.
“Alternatives that gut consumer protections and do nothing to empower the American people by cracking down on unfair and predatory practices are unacceptable, and I urge the Senate to vote no on weakening consumer protections and instead stand with the American people.”
The Shelby amendment would place a Division of Consumer Financial Protection within the Federal Deposit Insurance Corporation — a move that the White House said would weaken its powers and oversight.
Obama envisions a separate Consumer Financial Protection Agency that would have the power to force banks, mortgage companies and finance firms to desist from predatory practices and efforts to confuse clients about conditions of their products.
It would ensure greater transparency on products like payday loans and mortgages.