Jan. 9 (Bloomberg) -- Consumer advocates say the incoming administration of President-elect Barack Obama and a new Congress may be their best chance in years to pursue reforms from credit cards to health care.

“We’re hoping to play offense rather than being backed up on the goal line all the time,” said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group in Washington. In the capital, there is an entire industry devoted to “crushing consumer protection,” he said.

Restoring a consumer affairs office in the White House which was closed during the Clinton administration tops a to-do list published in December by U.S.PIRG, the Consumer Federation of America, the National Consumers League and four other groups. Other priorities are reining in “Wall Street excesses,” on predatory lending, protecting consumers from price-gouging in energy markets and enhancing legal options for consumer complaints.

A lot of ideas on the table now were “absolutely” non- starters over the last eight years, said Joan Claybrook, president of Public Citizen, a group co-founded by activist and former presidential candidate Ralph Nader.

“We ought to push all the issues on our list,” Claybrook said. “This is an opportunity we haven’t had for a long, long time.”

Business lobbyists say the way may have become easier for consumer groups, but they will work to show the high cost of some proposed rule changes.

‘Pragmatic Approach’

The business community is “optimistic” that President- elect Obama will “take the same pragmatic approach” he has shown on other issues, said Ed Krenik, a consumer products lobbyist at Bracewell & Giuliani LLP in Washington, who has advised all-terrain vehicle manufacturers such as Honda Motor Co., Kawasaki Heavy Industries Ltd. and Polaris Industries Inc.

“It certainly is true that consumer groups will have the ear of the Obama administration and in Congress,” Krenik said. “However, the last thing the new administration or Congress will want to do is to impose onerous, unnecessary rules and regulations that burden U.S. retailers and manufacturers in these tough economic times.”

The tide toward more consumer-oriented regulation may have been shifting before Obama’s election in November that also resulted in increased Democratic majorities in the U.S. House of Representatives and Senate.

Budget Increase

Last July, Congress passed a law that raised the budget of the Consumer Product Safety Commission to $136 million in fiscal 2014 from $63 million in 2007 amid recalls of Chinese-made toys containing lead. The legislation, the first overhaul of consumer-protection laws in almost two decades, also increased fines for companies violating agency rules to as much as $15 million, more than 10 times the former amount, effectively banned lead in toys and established a new database of safety complaints for 15,000 products the commission regulates.

Last month, the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration, unveiled rules limiting lenders’ ability to raise interest rates on existing credit-card balances and giving consumers more time to pay credit-card bills. The rules represent a “major sea change,” Montrice Yakimov, the Office of Thrift Supervision’s managing director of compliance and consumer protection, told Bloomberg Television.

Banks said the new rules will require them to overhaul their business models and may restrict customers’ access to credit.

Victims of Model

Consumers using credit cards have been victimized by a business model that relies on charges, fees and penalties, said Sally Greenberg, executive director of the Washington-based National Consumers League. While the new rules are a good start, the regulators’ decision to delay their implementation until 2010 won’t give individuals the immediate “life jacket” they need, she said.

“They’re rewriting their credit-card agreements every couple of months,” Greenberg said of the card industry. “Why do they need years to give consumers the relief they need?”

The AARP, which advocates for older consumers, unveiled its legislative agenda Jan. 6, including proposals for reducing health-care costs and making retirement saving easier. The 40- million member Washington-based group also wants bankruptcy judges to have the power to adjust mortgages to avoid foreclosures.

U.S. Representative Barney Frank, the Massachusetts Democrat who heads the Financial Services Committee, told the Consumer Federation of America in December he would consider an overhaul of regulatory agencies. The Financial Industry Regulatory Authority on Jan. 8. issued rules limiting securities’ firms ability to file motions to dismiss investor arbitration cases.

Overhaul Proposed

President-elect Obama said on CNBC Jan. 8 that he would propose an overhaul of the U.S. financial regulatory system by April.

Frank said consumer protection and industry regulation should be separate functions. “We’ll be beefing up consumer safety,” he said.

A new agency modeled on the consumer product commission but focused on financial products has been promoted by Elizabeth Warren, a Harvard law school professor and member of the panel overseeing Congress’s $700 billion bailout of the financial industry. Senator Richard Durbin, an Illinois Democrat, introduced legislation to do so last September.

A new, broadly focused agency would create a more lasting legacy for the consumer groups, Warren told a Consumer Federation gathering, much more than a mere list of 10 or 100 favorite reforms. This was, she said, a rare “regulatory moment,” akin to the fall of Enron Corp. when industry lobbyists were in retreat.

Safety Needed

“Visible products are evaluated for safety,” Warren said.

“Financial products need to be safe as well. We’ve looked at these as contracts. They’re not. They’re products. We give people a 31-page credit-card contract and fault them for not spotting something that any lawyer could have seen. We don’t permit that with any physical products.”

The financial planning industry may see legislative reform in 2009 as well, according to the National Association of Personal Financial Advisers’ Chairwoman Diahann Lassus.

The three major financial planning organizations, NAPFA, the Financial Planning Association and the Certified Financial Planner Board of Standards, Inc., have banded together to make sure they have a say in any regulatory reform in the wake of Bernard Madoff’s alleged $50 billion Ponzi scheme.

“We’re looking for a higher bar for everybody,” Lassus said. “We want to make sure that fiduciary standards don’t get watered down.”

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net.

Last Updated: January 9, 2009 00:01 EST