Obama adviser blasts big business ads

Larry Summers, top Obama economist, blasts ad campaign opposing proposal to create agency to protect financial consumers.

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By Jennifer Liberto, CNNMoney.com senior writer

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WASHINGTON (CNNMoney.com) -- A top White House adviser said Friday that business opponents of President Obama's plan to create an agency to protect financial consumers are trying to "scare people."

Larry Summers, director of Obama's National Economic Council, criticized an ad campaign by the U.S. Chamber of Commerce for suggesting that a new consumer agency will hurt small businesses that extend credit to their customers.

Summers compared the advertisements to the "death panel ads" invoked by opponents of health care reform.

"I'd suggest those ads are the financial regulatory equivalent to the death panel ads being run with respect to health care," Summers said in a speech at Georgetown University. "Those without a good argument try to scare people ... that's what is happening here."

Summers' comments are the harshest yet by a high-ranking White House official directed at foes of the consumer agency proposal, which has become the flash point in the congressional debate over how to overhaul the financial system to prevent future crises.

President Obama, during his weekly address on Saturday, also turned up the heat against campaigns to kill the consumer agency. He called creation of the agency key to financial system reforms, because they aim to help those who "signed contracts they didn't fully understand offered by lenders who didn't always tell the truth."

Obama railed that "lobbyists for big Wall Street banks are hard at work trying to stop reforms that would hold them accountable and they want to keep things just the way they are."

The proposed Consumer Financial Protection Agency would be able to examine and subpoena information from banks, while regulating things like mortgages and credit cards.

Summers didn't name the Chamber of Commerce, but he described its ads in detail, which say the proposed agency would prevent small retailers like florists and bakers from being able to extend credit to their customers.

The Chamber, one of the most powerful business lobbies in Washington, had announced earlier this month that it is spending $2 million to fight the proposal. On Friday, a spokesman said the group stands by its argument that the bill goes too far.

"Adding a layer of bureaucracy is not the right answer to consumer protection," Chamber spokesman Eric Wohlschlegel said.

The Chamber says the ads are intended to point out the group's concern that the proposal is vaguely worded and could apply to many different kinds of businesses.

In talking about the ads, Summers also detailed top White House priorities for regulatory reforms.

"We've become convinced that consumer financial regulation be carried out by an independent body whose mandate is exclusively consumer protection," Summers said. "This idea, which one might not have supposed to be the most controversial has generated substantial controversy." To top of page

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