MELISSA BLOCK, host:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris.
When Congress returns to Washington, it will face 1,279 pages of unfinished business. That's the House bill designed to reshape the financial system. The bill would create a big new regulator: the Consumer Financial Protection Agency. But from the moment that regulator was proposed, banks, phone companies, lawyers and car salesmen, among others, have been working tirelessly to exempt themselves.
David Kestenbaum and Chana Joffe-Walt of NPR's Planet Money explain.
CHANA JOFFE-WALT: There's a joke floating around the financial world that a lot of banking lobbyists got toasters for Christmas this year.
DAVID KESTENBAUM: Not because they didn't make a lot of money; because they're tired of hearing Elizabeth Warren make the toaster argument. Elizabeth Warren heads a panel on the financial crisis put together by Congress. And her toaster argument for why we need a Consumer Financial Protection Agency goes like this.
Dr. ELIZABETH WARREN (Chair, Congressional Oversight Panel): You can't buy a toaster in America that has a one in five chance of exploding. But you can buy a mortgage that has a one in five chance of exploding, and they don't even have to tell you about it.
JOFFE-WALT: We have agencies that protect people from bad toys, milk, but there's no single agency that would stop banks and auto lenders and credit card companies, everyone, from selling you the financial equivalent of an exploding toaster.
KESTENBAUM: And so, back in June, the Obama administration proposed a new government regulator. This would be an agency that would regulate any and all financial products and services. The administration used the words broad jurisdiction a lot.
JOFFE-WALT: Broad jurisdiction, two words that freaked a lot of people out in the financial world. Troops mobilized. Fine, they said, regulate, but not me. First, there were the small banks.
Sal Marranca is president of a 108-year-old one in western New York, and he and lots of lobbyists shared their feelings.
Mr. SALVATORE MARRANCA (CEO, Cattaraugus County Bank): I'm against a new government, all-potent, all-powerful, all-start-from-scratch, build a new building, staff it with 10,000 people, make them judge, jury and executioner for something I'm already being regulated on.
JOFFE-WALT: Marranca says small banks already have so many regulators that when the regulators come to do inspections, there aren't enough rooms to put them in.
KESTENBAUM: So Marranca and people like him got some lawmakers to agree, and here in the House bill, the Miller-Moore amendment. It basically says small banks do not need to be examined by the new Consumer Protection Agency, but they would have to follow any new rules.
JOFFE-WALT: Sal Marranca is happy. The financial crisis, he says, not his fault. He says, you know whose fault it was?
Mr. MARRANCA: Fifty thousand mortgage brokers out there that were giving people adjustable mortgages that tripled in six weeks, or whatever the heck happened to those.
KESTENBAUM: Chana, I can see in the bill here, those mortgage brokers weren't so excited about new regulation either. Yes, here at page 770 - exclusion for real estate licensees.
JOFFE-WALT: It's a partial exclusion. It goes like this: If brokers are central to working out a mortgage with you, they're covered. But if they just talk to you about the house and the interest rate, help you out, they're exempt.
KESTENBAUM: The Chamber of Commerce wanted an exemption, too, for businesses. Some stores have their own credit cards or layaway plans.
JOFFE-WALT: And the Chamber of Commerce put out this ad saying small businesses are already suffering.
(Soundbite of TV advertisement)
Unidentified Woman: Now, Washington wants to make it worse with the CFPA, a massive new federal agency that will create more layers of regulation and bureaucracy.
KESTENBAUM: Yeah, Chana, page 760: exclusion for merchants, retailers and sellers of non-financial services.
JOFFE-WALT: Yes, that comes right before the exemption for insurance companies, accountants, tax preparers, modular home retailers, and attorneys and car dealers.
KESTENBAUM: Yeah, some people are really upset about that one. Car dealers, a lot of times, set you up with a loan.
JOFFE-WALT: But the dealers argue: We're not the ones making the loan; we just sell cars.
KESTENBAUM: Consumer groups say, wait, car dealers are the ones who help you choose a loan.
JOFFE-WALT: So, depending on how you see this, we've got a bunch of special interests sneaking exemptions into the bill.
KESTENBAUM: Or you can see them as knowledgeable advocates improving the bill.
JOFFE-WALT: Whatever bill we end up with will be at least 1,000 pages long.
KESTENBAUM: And sometimes it's not until after the next financial crisis that someone goes back and says, see here, page 458 - that was the problem.
I'm David Kestenbaum.
JOFFE-WALT: And I'm Chana Joffe-Walt, NPR News.