As the Senate continues debating financial-industry reform this week, I'd like to re-iterate a point I first made in a Time.com article: lots of businessmen are in favor of a sweeping overhaul.
You wouldn't necessarily know that from reading the headlines, since headlines tend to capture the highest profile lobbying"”like what comes from the U.S. Chamber of Commerce. Those stories usually say that companies are wary of financial-industry reform, typically because of the fear that the cost of doing business will rise.
But that attitude is far from pervasive.
Many business groups, such as the South Carolina Small Business Chamber of Commerce and the U.S. Women's Chamber of Commerce, have been out arguing that stronger laws are exactly what we need"”even in the form of an independent Consumer Financial Protection Agency (CFPA), which often gets painted as the antithesis of what companies would want.
Why would a business welcome new oversight? Well, partly because if consumers aren't protected from hazardous financial products, then they won't, in the long run, have as much money to spend at companies selling goods and services. Another reason: business owners themselves rely on financial products.
As the CEO of the U.S. Women's Chamber of Commerce recently put it in an op-ed:
The creation of a strong, independent Consumer Financial Protection Agency will benefit businesses, especially small businesses, which create most of the nation's new jobs. It's too often forgotten that small-business owners frequently rely on personal credit "“ such as personal credit cards and home equity loans "“ to start, run and expand their businesses.
In the story I wrote, which you can read here, I also talk about why some corporations are pushing for strict regulations when it comes to financial derivatives.
The main point, which I hope we don't lose sight of, is this:
People who run companies, from small businesses to massive corporations, are split on whether the effects of the new legislation would add up to a net benefit to or a net drain on their operations and profits. That reflects the inherent tension of any sort of regulation "” making the overall system safer means constraining what certain individual players are allowed to do...
The bottom line is that when it comes to a topic as complex as financial reform, any sweeping statement is almost sure to be wrong. Will businesses be burdened by financial reform? Yes, some will. For many, the benefits will outweigh that additional burden, but for others, they won't. The point isn't to listen to the companies that can shout the loudest but to make decisions that do the most good for the most actors in the economy, now and for years to come.
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