The Other Reform Fight: War of Words Over Financial Reform Heats Up

ABC News’ Matthew Jaffe reports:

Health care reform isn’t the only game in Washington this week.

On Monday Senate Banking Committee chairman Chris Dodd called for the biggest financial regulatory overhaul since the Great Depression. In the wake of Wall Street’s meltdown in the fall of 2008, Dodd proposed sweeping new changes, including a consumer protection agency to be housed within the Federal Reserve.

“We are still vulnerable to another crisis – and neither I nor anyone else can tell you with any degree of certainty that the American economy could survive another crisis of this magnitude,” Dodd said. “It is certainly time to act.”

But Dodd’s allies weren’t the only ones to heed his call to action – his opponents did, too.

Hours after Dodd released his proposal, the Chamber of Commerce ripped into it, saying the measure would harm the country’s long-term economic recovery.

“This bill takes three steps backwards with the hope of making future progress,” said David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness.

And yesterday the Chamber of Commerce announced plans for a $3 million ad campaign to fight the reforms.

While the White House might be focused on health care reform this week, that did not keep deputy communications Jen Psaki from pushing back against the Chamber’s attempt to thwart Dodd’s efforts.

“That’s $3 million to fight a bill that will protect American families,” Psaki said in a blog on the White House website, accusing the Chamber of Commerce of coming “to the aid of the financial institutions that helped bring about this crisis.”

“The recession and the aftermath of the financial crisis saw over 8 million Americans lose their jobs, trillions in household wealth disappear, and small businesses denied the credit they need to grow,” she stated. “And this was all brought about by a system that failed to monitor or constrict the risk-taking of firms that were too big to break apart in a way that would protect taxpayers. The US Chamber of Commerce doesn’t think that’s a problem worth fixing, but the President does.”

But the Chamber of Commerce isn’t the only White House nemesis fighting the Democrats’ financial reform push.

On Wednesday House Republican leader John Boehner of Ohio urged a group of bankers to force Capitol Hill staff members into changing the proposed reforms, according to MarketWatch .

“Don’t let those little punk staffers take advantage of you,” Boehner told the American Bankers Association summit. “And stand up for yourselves.”

The battle for health care may be coming to a close, but it seems that the fight for financial reform is only just getting started.

-Matthew Jaffe

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