On Warren Olney’s radio show To The Point yesterday, I had a chance to talk with US Chamber of Commerce management directly regarding the issue posed here last week: Why would an organization representing 3 million small businesses come out in support of our largest banks? My question was picked up and focused by the host.
Warren Olney (at the 36:35 mark): “Mr. Hirschmann, back to you. Are you serving the interests of your own members, if you resist the idea of breaking up the big banks?”
David Hirschmann (leading the Chamber’s financial lobbying efforts): “I just don’t think the question is whether we need to break up the big banks. The question is how do we ensure that the kinds of practices that they engaged in — and others outside the banking system — don’t happen any more. Which is why we pointed to transparency in areas like derivatives and leverage.” [my transcription]
Mr. Hirschmann then goes on to talk about the consumer protection agency (he’s opposed).
The conflict between the Chamber’s principles and its actions becomes increasingly clear.
Hirschmann made some good statements, along the lines of: no one should have permanent access to the taxpayer’s pocket, and any firm – no matter how large – should go out of business if its managers make the wrong decisions. This is exactly what the representative of small business should say.
But, despite being given repeated opportunity to say something at least generally along the lines of Alan Greenspan last week (e.g., “too big to fail is too big to exist”), Hirschmann retreated into platitudes about the need to modernize our entire regulatory system.
At the same time, he emphasized that the Chamber is adamantly opposed to the main piece of this modernization – as proposed by the administration – which is a new agency to protect consumers vis-à-vis financial products.
He didn’t dispute that the actions of our largest financial players have seriously hurt small business people – through bringing about a massive financial crisis and deep rececession – but the Chamber apparently favors just reshuffling regulatory responsibilities and more “transparency” on all sides.
There is a long tradition in the United States of big business trampling on independent entrepreneurs, and of those entrepreneurs fighting back through the ballot box. This time around, big banks captured their regulators, badly damaged small firms, and look set to do it again.
Why is the Chamber of Commerce refusing to stand up for small business?
By Simon Johnson