Posted by Kristie Arslan - This week, President Obama headed up to New York to again speak to Wall Street about getting on board with efforts to improve accountability and increase safeguards to protect consumers from the abusive practices of financial institutions that led to the collapse of the financial markets. His speech dovetails with the efforts of the Democratic leadership in the Senate to pass financial regulatory reform legislation.
Per usual, debate surrounding this topic has taken an increasingly partisan tone. Along with Republicans, financial institutions and various business organizations, such as the U.S. Chamber of Commerce, have come out in opposition to the Administration's approach to reforming our financial markets. A key point of contention is the expansiveness of the proposal. Many feel that it will excessively inflate the regulatory role and reach of the federal government, which could detrimentally affect America's economic competitiveness at home and abroad.
The National Association for the Self-Employed reached out to our self-employed members to obtain some insight on their point of view on financial reform. While our nation's smallest businesses are perpetually wary of new federal bureaucracies such as the proposed Consumer Financial Protection Bureau, a new independent agency which would be created by the financial reform legislation, their biggest concern is that new rules issued by this regulator and others may increase their cost of doing business and negatively impact their ability to access credit.
Yet, despite this concern, micro-businesses still believe there is a need for oversight and accountability on Wall Street. The self-employed and micro-businesses were hit particularly hard during the financial crisis and are still reeling from its effects. Much of their personal finances are tied up with their business finances. Their reliance on credit cards, lines of credit and home equity loans to help with the daily operating costs of their business left the self-employed especially vulnerable to unpleasant industry practices.
NASE Member Jere Smith, owner of Lancelot Inc. in Liberty, Missouri commented, “During the financial crisis, business definitely declined for our transmission shop. We had used credit cards to pay bills. Our credit card company canceled these lines of credit; my husband and I each had a card. Once our lease was up we had to sell our business to our landlord at a huge loss.”
We think it is important that Congress and the Administration work to ensure Main Street does not end up with increased burdens from their reform efforts, but at the end of the day the NASE and our self-employed members support creating a transparent and fair financial marketplace with increased consumer protections and consumer education.