Colston E. Warne Lecture: Is it Time for Another Round of Consumer Protection? The Lessons of Twentieth-Century U.S. History

The first year of Barack Obama's presidency has returned consumer issues to center stage, with several contentious struggles over consumer protection. This moment can be viewed as a fourth wave of the twentieth-century consumer movement, and a comparison with the first three waves (during the Progressive Era, the New Deal, and the 1960s-1970s) offers instructive insights. In particular, the contemporary battle over the Consumer Financial Protection Agency bears striking similarities to the failed campaign for a Consumer Protection Agency in the 1970s. ********** In the first year of Barack Obama's presidency, whether--and how--to protect consumers has become one of the most contentious issues before the nation, and many of the other hot policy debates, such as revamping health insurance, could be construed as consumer issues as well (Dilemmas of Debt 2009; Liberto 2009; Voice for the Consumer 2009). At the time of this writing, seven months into Obama's term, a commitment to strengthening a weakened Food and Drug Administration and Consumer Product Safety Commission (CPSC) has made headlines, and legislation to protect consumers from credit card company abuse has been passed by Congress and signed by the President (Cooper 2009a; Cornish 2009; Ferraro 2009; Leondis 2009; Liptak 2009; Martin and Harris 2009; Moss and Martin 2009; Stephen J. Dubner, Freakonomics Blog, comment posted July 16, 2007; Substantial Complications 2009). Moreover, we are currently witnessing a deadly shootout over a proposed Consumer Financial Protection Agency (CFPA), intended to regulate how financial institutions provide a range of products, including mortgages, credit cards, and bank accounts (Andrews 2009; Cooper 2009b; Dennis 2009a, 2009b; Herbert 2009; Labaton 2009; Martin and Story 2009). The dueling sharpshooters are the Obama administration and its liberal Democratic Congressional allies like Barney Frank, on the one hand, and big banks, credit card companies, the U.S. Chamber of Commerce, and many Republican lawmakers on the other. Ben Bernanke, chief of the Federal Reserve, publicly sided against the White House and with the opponents of the CFPA, arguing that a new agency was unnecessary and the Fed should retain responsibility for consumer protection (Americans for Financial Reform; Aversa 2009). I am a historian of the past, not a predictor of the future. So I cannot anticipate how these contemporary struggles will turn out. What I can do, however, is document what we know about other moments of conflict over protecting consumers and explore what that historical perspective suggests about our current challenges. First, I will present what in my book, A Consumers' Republic: The Politics of Mass Consumption in Postwar America (Cohen 2003), I have identified as three waves of consumer mobilization in the twentieth century: the first wave in the Progressive Era during the early decades of the twentieth century, the second wave from the Great Depression through the 1940s, and the third wave during the 1960s and 1970s. One might, in fact, call the present moment the fourth wave of consumer activism, as a new President has just taken office with a reform agenda that includes a number of consumer-oriented initiatives. Then, I will focus in on a struggle not so very different from the one we are engaged in today over creating the CFPA, the long--and ultimately unsuccessful--battle for a cabinet-level Consumer Protection Agency (CPA) during the 1970s. Understanding why that effort failed will hopefully provide some usable lessons for today. First, here is an overview of the three waves of consumer mobilization over the twentieth century (Cohen 2003, 2008). All three waves coincided with broader periods of reform--whether the Progressive Era of the early twentieth century, the New Deal of the 1930s and 1940s, or the Great Society of the 1960s. In al three periods, it seems, when reformers critiqued the failings of the status quo and sought to establish a more equitable and socially responsible capitalist democracy, they seized on better protecting the rights and safety of consumers as a crucial step. …