David Hills and Michael Lent: Financial reform
Column by David Hills and Michael Lent
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Millions of America’s small business owners suffer from bad practices on Wall Street – something often given short shrift in debate about creation of a consumer financial protection agency.
As owners of a financial advisement firm with offices in Portsmouth, N.H., San Francisco and New York, we focus on financial products with sustainability, values and transparency. And with more than 70 years of collective experience in the financial services industry, and many clients owning small businesses, we’ve long known that what’s good for Wall Street isn’t necessarily good for small businesses and consumers.
Through irresponsible lending, greed and poor risk management, huge Wall Street investment firms and banks brought about a financial crisis that’s resulted in massive unemployment and hardships for millions. But while small businesses have borne the brunt of the downturn, it is they who will create the jobs that rebuild our communities.
Ability to access affordable credit with clear and concise contractual language is imperative. Studies have shown that most small businesses are financed through the personal credit of their owners, yet ubiquitous tricks and traps of credit cards and consumer loans have snared small business owners just as they have individuals. What’s worse is that large banks and credit-card companies have unilaterally withdrawn credit from small business owners just when they need it most – and they’ve done so regardless of credit and payment history.
A Consumer Financial Protection Agency (CFPA) that safeguards financial products and services is long overdue. We all rely on sound business practices when we expand our businesses, hire new workers, meet payroll and do long-term business planning.
Business owners need the security of knowing that the financial services they receive from one lender carry the
same level of protection as those from any other, and that all lenders – credit cards, trade credit and independent finance companies included – are offering fair financial services.
It’s wrong to think the choice lies between consumer protection and a sound environment for banking – as if these issues could ever be mutually exclusive. Any legitimate industry can prosper under fair regulation simply by offering products and services that users understand and can purchase without being tricked. Our economy and the financial sector will prosper over the long haul only if financial transactions no longer include deception, profiteering and excessive risk-taking. The current lack of consumer protection has helped plunge our banking system into crisis, wreaking havoc on millions of individuals and families.
Financial reform that includes a strong independent consumer financial protection agency will end the reckless use of financial products that has stalled small-business expansion and necessitated countless layoffs. Transparency and accountability must be applied to financial markets. A CFPA will help the economy and those financial companies already practicing fair policies. No longer will responsible firms need compete against those that profit from unscrupulous practices, unfair terms and deceptive marketing.
A CFPA is good for business, good for the economy. It’s a core element of financial reforms wending through Congress. And anything less than a strong, independent consumer financial protection agency will perpetuate whatever sense of mistrust Americans already have in Wall Street and government.
Protecting consumers and small business from financial ruin shouldn’t be a partisan issue. Never, ever. Democrats and Republicans alike must swiftly enact this legislation and get our economy working again.
David Hills, CSO, is a partner with Veris Wealth Partners LLC in New Hampshire. Michael Lent, CFO, is a partner of Veris Wealth Partners in New York.