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2nd UPDATE: Obama Steps Up Push For Consumer Financial Protection

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WASHINGTON -(Dow Jones)- Ratcheting up his drive for new financial regulations, President Barack Obama took direct aim at the industry groups that oppose his proposed Consumer Financial Protection Agency, calling their criticism "completely false."

"They're doing what they always do - descending on Congress and using every bit of influence they have to maintain a status quo that has maximized their profits at the expense of American consumers, despite the fact that recently a whole bunch of those same American consumers bailed them out as a consequence of bad decisions that they made," Obama said in a speech at the White House Friday. "Since they're worried they may not be able to kill this agency, they're trying their hardest to weaken it."

The consumer agency is one of the primary components of the regulatory revamp Obama wants lawmakers to pass before the end of the year. But it has come under fire from Republicans and Wall Street. The banking sector has been lobbying to water down the legislation so the agency doesn't have the ability to enforce the rules that it writes.

Obama, however, signaled that the agency must be given the teeth to be effective.

"The consumer agency we're proposing would set ground rules so that firms don't have to compete to confuse families, but to give them better choices," he said. "This will also help small-business entrepreneurs who often rely on credit cards and home-equity loans to finance their start-ups."

Obama had sharp words for his opponents, calling out the U.S. Chamber of Commerce in particular for spending "millions" on a public campaign to kill the agency.

"You might have seen some of these ads - the ones that claim local butchers and other small businesses will somehow be harmed by this agency," Obama said. " This, of course, is completely false - and we've made clear that only businesses that offer financial services would be affected by this agency."

He also shot down concerns that the agency would restrict consumer choice and innovation in the financial arena: "Nothing could be further from the truth."

The Chamber of Commerce, in a statement front-running Obama's remarks, said existing regulators should have their powers expanded to crack down on predatory practices, but repeated that it views the new agency as the wrong approach.

"We disagree that a massive new federal agency with unprecedented powers over vast segments of the business community will be good for consumers, for America's job creators or for the economy," David Hirschmann, president of the Chamber's Center for Capital Markets Competitiveness, said in the statement. "We disagree that adding a new agency atop a broken regulatory system solves the problem or closes regulatory gaps. And, we don't agree that consumers are well served by allowing the states to each create different disclosures, and regulations on top of those created by the proposed new regulator."

Obama was joined at the White House be a who's who of administration officials and regulators, including Treasury Secretary Timothy Geithner, FDIC chief Sheila Bair and CFTC head Gary Gensler.

In an effort to rally public support for the regulatory rewrite and show the stakes for regular Americans, Obama also met Friday with four people the White House said have been hurt by outdated financial regulations. One of them, Karen Cappuccio, a 31-year-old supervisor at the Transportation Security Association, fell victim to unscrupulous practices by a mortgage broker. Another, Maxine Given, 44, was incorrectly charged $148 in overdraft fees.

"Abuses like these don't just jeopardize the financial well-being of individual Americans - they can threaten the stability of the entire economy," Obama said. "And yet, the patchwork system of regulations we have now has failed to prevent these abuses."

-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@ dowjones.com

  (END) Dow Jones Newswires
  10-09-091527ET
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