It is similar to health care and to other financial reform, in that the president came out early with a strong statement in favor, and now nothing is being done. The representative democracy we are supposed to have now looks like nothing so much as the bureaucratic dictatorship of another country fitted out with multi-billion dollars in stuffed suits and accompanied by loudspeakers to drown out conscious thought.
If only financial reform really were funny
By Katrina vanden Heuvel
Washington Post
March 9, 2010
In a hilarious video plug for the proposed Consumer Financial Protection Agency, the popular comedy Web site funnyordie.com gathers Saturday Night Live's famed presidential impersonators -- from Chevy Chase to Will Farrell -- to advise a slumbering Barack Obama (Fred Armisen). Dana Carvey, reprising Daddy Bush, tersely sums up the whole shebang about financial reform:
"What you gotta understand is that we got a regulatory issue here. We gotta regulate that or we're gonna get more bubbles. Gonna get bigger, larger, then pop, money goes to the weasels."
Got that right. After the worst financial collapse since the Great Depression, financial reform isn't a luxury. And it shouldn't be a partisan issue. Everyone from the tea partiers to Volvo-driving liberals has a stake in shutting down the casino and getting the big banks under control.
Of possible reforms, creating an independent agency to protect consumers from financial abuse should be one of the easier lifts. The problems are obvious. Consumers are battered routinely by predatory mortgage brokers, shifty credit card companies and rapacious pay-day lenders with exorbitant fees. We've seen that these practices can bring down the global economy, not just the vulnerable consumer. And the utter failure of the Federal Reserve and other regulators to use their powers to police the banks has amply demonstrated the need for an independent cop on the beat. As Elizabeth Warren, chairman of the congressional panel bird-dogging the bank bailout, likes to note, the government does a better job monitoring the safety of toasters than the safety of mortgages that can bankrupt families.
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Meanwhile, the fixes to these problems enjoy overwhelming popular support.
Polling by the Pew Research Center shows that nearly 60 percent of Americans favor tougher regulation of banks. And, as pollster Celinda Lake notes in a survey for the liberal political group Accountable America, the tougher -- "round up and throw in jail" -- the more popular. As Warren said at a conference on financial reform in New York this month: "This is a dispute between families and banks, not between conservatives and liberals."
So there is no better measure of how craven and corrupt our politics have become than the news that the proposal for the Consumer Financial Protection Agency is about to be abandoned in the Senate. Republicans opposed it from the start, while shamelessly peddling themselves to Wall Street's deep pockets. In the House, not one Republican voted in favor of the diluted reform bill that includes an independent CFPA. And in the Senate, Republicans announced that the price of bipartisan agreement was to shelve any notion of an independent agency. Instead, they're pushing for a new presidentially appointed watchdog to be put inside the Federal Reserve -- with rule-making subject to objections by the very same regulators who failed so consistently and ignominiously to protect consumers in the past. Senate Banking Committee Chairman Chris Dodd is trying to get Democrats to sign on to an only slightly toothier version of this compromise. Barney Frank, Dodd's counterpart in the House, had the better reaction: "I thought it was a joke at first, to be honest."
In this debate, the president has been largely absent without leave. Mired in the interminable health-care debate, he has been unable or unwilling to provide Americans with a clear explanation of what needs to be done to dig our way out of the hole we're in. Without a White House willing to fight hard for reform, Republicans and corporate Democrats pay little price for catering to the bank lobby.
"I have been most struck by how invisible the issue has been as part of the public debate," Bill McInturff, a Republican pollster, told the New York Times. If voters don't "understand what it is and why it matters," he added, "it's unlikely to have much consequence in the campaign."
With The Post, the Times and "60 Minutes" all assuring us that White House Chief of Staff Rahm Emanuel is a political genius, this White House failure is truly befuddling. Surely, nothing is more vital to the economy's future, or to the Democrats' political fortunes, than to take on the banks, get them under control, provide consumers with some protection, and make banking a boring profession once again.
The sad thing is that an independent CFPA, as important as it would be to American families, would not even begin to address the hard stuff. Goldman Sachs would still be able to peddle the derivatives that have brought down polities from Greece to Jefferson County, Ala. The banking sector would be as concentrated and "too big to fail" as ever. The deformed executive-compensation schemes that give bankers multimillion-dollar personal incentives to take untoward risks would remain in place. And federal regulators would continue to stand by.
In the funnyordie.com video, Carvey playing Bush I advises Obama that he should risk his popularity to get the CFPA passed. But this isn't about popularity; it's about challenging the power of the banking lobby. Armisen's Obama asks why he has to "clean up this mess that you all created. Take on the banks and all their trillions of dollars." Well, says Jim Carrey's Ronald Reagan, "As George Washington once said to John Adams, 'Tag, you're it.'" We should all hope that, before it's too late, the real president wakes to realize that.
The writer is editor and publisher of the Nation. She also writes a weekly column for The Post.
Posts
A simple agency to protect the consumers is very different from one to protect the banks who only survive because they can rip the customers off. Placing the CPFA within the Fed is simply going to be a disaster. If a bank says that they cannot afford to comply with the regulations the Fed will simply remove those requirements for the bank.
ReplyDeleteAs the banks already effectively control the fed, any regulation that intends to protect customers will get watered down or overlooked completely in the Fed. they have failed in their regulation of the too big to fail banks so why should they be any better at consumer financial protection?
The best solution is a separate agency. Which could possibly be extended over time to cover insurance and health insurance. I really like the idea of vanilla products. Without all the traps and pitfalls you can compare products. Banks should be mandated to offer them. They could make them as unattractive as possible but then at least customers can move to banks that offer attractive vanilla products.
As for bank accounts I would like to see a ban on fees for any accounts with a low income user as under $30 000 pa. There could be restrictions like limited overdrafts but that alone could end pay day loans. It would also be cheaper for employers as they could do direct transfers for wages avoiding the problems with cheques. Staff could pick up their cash via ATM as they need it.
In the UK we have some new credit card legislation coming that will protect customers. I am not surprised that the US is not protecting its citizens.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/7447138/Credit-card-clampdown-what-does-it-mean-for-me.html