USA Today Cheers Proposed Financial Protection Agency

Don’t be surprised if you open up the June 24 USA Today and find pom poms in the ‘Money’ section.

Reporters-turned-cheerleaders Paul Wiseman, Jayne O’Donnell and Christine Dugas wrote a glowing 38-paragraph story about the proposed Bureau of Consumer Financial Protection (BCFP). The story even included a section called “keys to a new agency’s success” with quotes from “experts” at a wide variety of government agencies from the Environmental Protection Agency to the Food and Drug Administration.

USA Today’s story began by praising the creation of the EPA in 1970 and the way it hit the ground running by ordered city mayors to clean up their water. They included 10 “expert” voices in favor of government agencies (proposed or current) many of whom were former regulators, against only three voices of opposition – all politicians.

“It’s exciting to think about building an agency that could make a real contribution, a real difference in the lives of millions of families,’ Harvard professor Elizabeth Warren told USA Today. Warren “proposed the consumer financial regulator in 2007 and is considered a top candidate to be the agency’s first director,” according to the story.

The paper barely mentioned Warren’s pro-regulation history which included compensation limits for large corporations. Warren also chairs the Congressional Oversight Panel that babysits companies bailed out by TARP funds.

Only three paragraphs were devoted to opposition to the new government agency. Critics were labeled by USA Today as “Republican” or “financial industry lobbyists.” No economists or academics who oppose additional regulation were consulted.

Some of the “keys to success” USA Today offered were “hiring motivated career staffers with diverse talents who will outlast political appointees at the top of the organization” and “making a big splash early on to establish your credibility.” However, William Galston of the liberal Brookings Institute feared that the BCFP would “get their knuckles rapped” if they go to far.

“If they make a mistake, it will more likely be on the side of excess. They will go too far and get their knuckles rapped, but I don’t expect them to be asleep at the switch like (BP regulator Minerals Management Service) was,” Galston said.

Of course the article failed to mention the past ineffectiveness of government regulators and didn’t mention any details of the Democrat-sponsored “Restoring American Financial Stability Act” other than the proposed BCFP.

John Berlau, director of the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute, told the Business & Media Institute the entire bill will have more negative effects on consumers than positive ones.

“It will set up a nanny state with unintended consequences,” Berlau said. “You’re punishing the many because of a few stupid people and the costs will just be passed on to consumers.”

Brian Johnson, federal affairs manager at Americans for Tax Reform, also criticized the proposal telling BMI that the bill is “one of the first steps towards nationalizing the banking system.”

“The BCFP is one of the worst things in this bill,” Johnson said. “They’re operating with a fat budget and can monitor personal transactions and map out grids with purchasing patterns.”

This isn’t the first time the media has pulled out its pom poms for liberal reforms or increased financial regulation. Perhaps next time the reporters will save their act for a football halftime show as opposed to a major newspaper.

Like this article? Sign up for “The Balance Sheet,” BMI’s weekly e-mail newsletter.