The Snowe-Pryor Amendment to HR 4173--Looking out for the Little Guy

I realize that the CEO of BP got into a lot of trouble this week saying that he cares about the "small people," but honestly somebody needs to. With so much emphasis on Wall Street, major banks, corporations which are too big to fail, no one really seems to care about the rest of us at all.

That is probably the reason that a lot of small business advocates are banding together to lobby for inclusion of the Snowe-Pryor Amendment (S Amendment 3883) in the final conference version of financial reform. The list of businesses lobbying for inclusion of this amendment is about as diverse as can be imagined: The Associated Builders and Contractors, the Association of Kentucky Fried Chicken Franchisees, the Taco Bell Franchisees, the Tire Industry Association, the Society of American Florists, Hispanic Leadership Fund, National Federation of Independent Businesses, the U.S. Chamber of Commerce, the U.S. Hispanic Chamber of Commerce and the United States Black Chamber of Commerce are among some of the organizations that sent a letter on June 11 to the members of the conference committee asking that Snowe-Pryor be included in the final bill.

The businesses and organizations named above are hardly the titans of Wall Street, nor are they companies and organizations which sell credit as a commodity. So why are they even interested in financial reform? Because they fear the overreaching powers of the Bureau of Consumer Financial Protection and its ability to regulate finances and limit and perhaps cut off access to credit.

The letter which these agencies sent to the conference committee states that the Snowe-Pryor Amendment, (S Amend. 3883, The Small Business Fairness and Regulatory Transparency Amendment) is necessary in order to require the Consumer Financial Protection Bureau to include recommendations from a small business advocacy review panel with any proposed rules that will have a significant impact on small businesses. And the Consumer Financial Protection Bureau must also inform the public of how its rules affect small business access to credit.

Senator Olympia Snowe (R Maine) and Senator Mark Pryor (D Ark) co-sponsored the amendment. On her website, Senator Snowe explains the need for this amendment as follows: "Plain and simple, onerous regulations are crushing the entrepreneurial spirit of American small businesses and hindering their ability to create new, good-paying jobs. By establishing a transparent rule making process that requires an impact analysis for smaller firms and valuable input from stakeholders, this amendment provides the one-two punch we need to guarantee that the CFPB will issue rules that maximize consumer protection while minimizing economic harm." By making the CFPB a "covered agency" under the rules of Regulatory Flexibility Act, the amendment guarantees that small business advocates can weigh in on its decisions. Federal agencies would have to consider the impact that their rules have on the cost of credit for small businesses and consider specific alternatives to minimize increases to the cost of credit.

Sounds great, doesn't it? After all, isn't the purpose of financial reform partially to protect the U.S. Taxpayer and by extension all of us individually--the small people--from the economic consequences of another financial meltdown. And shouldn't part of that protection include bolstering and protecting small businesses which provide most of the job creation in the U.S. According to the letter signed by the various small business advocates, "Small businesses have created about two out of every three net new jobs in the United States since the 1970's." And according to the SBA, as quoted on Senator Snowe's website, the annual cost of federal regulations totals $1.1 trillion with small firms paying 45% more per employee than their large counterparts.

So who would oppose an amendment to cut some breaks to the small business owner--who is the primary creator of the jobs that are so desperately needed right now? The American for Financial Reform would. This group, you may recall, is an umbrella organization pushing for financial reform comprised of a variety of organizations including the AFL-CIO, AARP, ACORN, the Center for Responsible Lending, and many other unions and consumer advocacy groups. One of their organizations, which calls itself the Main Street Alliance, "a national network of small business coalitions representing small business owners across the country," has written a letter which is posted on the Americans for Financial Reform website opposing passage of the Snowe-Pryor Amendment. The reason? "A strong, independent consumer financial protection arm is critically important to the future health and prosperity of America's small businesses...the Consumer Financial Protection Bureau will protect our customers from the toxic financial products that triggered the financial crisis, destroying millions of jobs, siphoning away disposable income, and decimating our sales and customer base."

But, adds the letter, "The Snowe-Pryor Amendment...will actually harm small business owners' best interests by undermining the consumer protection bureau's ability to operate efficiently. The amendment will add between two and six months to the rules process, possibly much more, by adding a redundant comment window...and by requiring a multi agency panel to draft a joint report on new rules ideas before the rules are even proposed to the public." The Main Street alliance wants passage of the Landrieu-Dodd-Kerry amendment, which it says has the "same commitment to small business input on rules and the same panel review process, but in a streamlined way that allows rulemaking to move forward without cumbersome and unnecessary delays."

Now wait a minute. Small business owners are already shouldering a disproportionately high burden of the 1.1 trillion dollars that are currently the cost of federal regulations, and yet the Americans for Financial Reform are concerned about cumbersome delays to the Consumer Financial Protection Bureau? Personally, I would love to know exactly what businesses the Main Street Alliance actually represents, because if the idea of an autonomous, powerful, intrusive new government agency doesn't scare them witless, I'd like to know why not.

Since the conference committee is slated to finish with the final reform bill which is on track to be on the President's desk by June 25, time is running out. But hopefully, in the end, someone will actually care for the small business owner, who is often the most overlooked, and overburdened species in our modern world.