Chamber warns against rumored consumer protection czar

President Obama's forthcoming overhaul of financial regulations should avoiding creating new regulations for corporations and instead focus on reform of the existing system, the Chamber of Commerce argued Tuesday.

In a conference call preceding the administration's expected announcement of a new framework for the financial services industry, the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness (CCMC) President David Hirschmann argued strongly against a new consumer protection regulator that will reportedly be introduced tomorrow.

"We need stronger consumer protections," Hirschmann said. "Creating a new consumer protection authority is not going to be a silver bullet; in fact, it may be a lead balloon."

The Chamber said it preferred the administration focus on increasing regulators' effectiveness and coordination, as well as on fixing gaps in existing regulation.

"We support an overhaul and transformation of existing regulators," Hirschmann argued. "Simply put, today's regulators don't have the tools or insight of the businesses they're regulating."

Examples of an overhaul the Chamber could support, Hirschmann said, would include required registration for hedge funds, increased transparency in derivatives markets, and an exit strategy for government intervention in companies.

The consumer protection regulator, however, seemed to be the Chamber's biggest concern in the forthcoming regulation.

"We will not support a standalone consumer protection regulator that cannibalizes the current system," Hirschmann said. "I think we'll have to demonstrate there's a more effective way to do consumer protection."