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August 7, 2010

The Lawyer With the Dragon Tattoo

Filed under: Harvey Column, President Barack Obama — admin @ 2:21 pm

This year’s most fearsome movie heroine is Lisbeth Sander, the hacker vigilante who outwits corporate and political evildoers with her superior investigatory skills, not to mention some kickboxing and the deft use of a taser. “The Girl With the Dragon Tattoo” smashes and hacks her way through the government officials, business executives and journalists that comprise Sweden’s lazy and corrupt Establishment. They do everything they can to stop her, but – I’m about to give away the ending – Sander ultimately triumphs, exposing decades-long corporate and government conspiracies.

Elizabeth Warren shares none of Sanders’ characteristics – except an exceptional intellect – ­but when it comes to inspiring fear and loathing among the denizens of Washington and Wall Street, she is every inch as frightening, as has been pointed out over the last few days in profiles and posts across the mediascape.

Warren, a bankruptcy professor at Harvard Law, long criticized the practices of America’s banks and credit card companies in law reviews and academic pieces. In 2005, when the financial industry was lobbying Congress to make it harder for the average American to declare bankruptcy, Warren penned a landmark analysis that concluded that most Americans sought bankruptcy protection not because they were freeloaders but because they could no longer afford to pay their medical bills. Long before the current crash, Warren proposed the establishment of a federal agency to protect consumers against credit card tricks and other financial abuses.

In November 2008, in a rare example of a perfect congressional appointment, Senate President Harry Reid put her in charge of the congressional task force monitoring how the $700 billion in taxpayers’ bailout money was spent. She has demanded answers to the same question we ask here: “where did the money go?”  The results of her investigations, which can be found here, pull no punches.

Back in 2008, no one could have expected that Congress would create a financial consumer watchdog agency of the kind Warren advocated for years.  But her powerful and outspoken performance as chair of the bailout oversight panel has made her the obvious and only credible candidate to head the new Consumer Financial Protection Bureau created by the otherwise innocuous financial “reform” legislation Congress passed a few weeks ago.

Which, of course, has got Wall Street fired up, members of Congress tied in knots and the White House cornered. Unlike the Byzantine complexities of the financial swindles and the ostensible legislative “solutions,” none of which garnered public attention much less support, the question of whether the President will appoint a skilled lawyer/consumer advocate to protect consumers, or whether he will instead choose a Wall Street insider as he did when he appointed Treasury Secretary Geithner and White House economic advisor Larry Summers, is one the public and press can easily grasp.

The appointment raises the kind of simple and straightforward “whose side is he really on?” question that Obama has so far been able to soft peddle, though he unceremoniously surrendered on the public option in the health care bill and on “too big to fail” banks in the financial reform bill, to name just a few instances of his unilateral disarmament.

Make no mistake: Warren is a highly sophisticated lawyer that knows all the tricks of the financial industry and how to use the powers of government to stop them. This expertise will be essential. I wrote a ballot proposition, approved by California voters in 1988, that regulates the insurance industry. Having spent the last twenty two years defending it against incessant lawsuits by industry lawyers and not infrequent efforts of elected state officials to hobble it, I can tell you that few decision-makers in the federal government have the technical skills and expertise to go head to head against the battalions of lawyering orcs deployed by big financial firms. Warren does.

Which brings us back to the fascinating spectacle of the hypocritical Washington establishment trying to grapple with her candidacy. She is, literally, made for the job, and a spontaneous grassroots campaign for her appointment is mounting around the country. But the politicians, obeying their paymasters on Wall Street, are trying to figure out a strategy to sabotage her nomination. It’s almost comic to behold. Republicans should be hailing Warren as a savior of beleaguered taxpayers, but one of their Senate leaders said that her tenure as chair of the bailout watchdog was “marked with ‘controversy”” and implied that Warren doesn’t have the necessary qualifications.

It’s the same for some Dems: Senate Finance Committee Chair Chris Dodd, who had never met a financial “innovation” (or industry lobbyist) he didn’t embrace until the whole rotten system collapsed two years ago, damned Warren with faint praise, the suggested she couldn’t be confirmed. He floated the name of FDIC Chair Sheila Bair, but she said no thanks.

Nor has the Obama administrationt been particularly supportive. Two weeks ago, Treasury Secretary Geithner was forced to dispel rumors that he is opposed to Warren by mouthing some platitudes about how “capable” and “effective” she would be in the post. A White House spokesperson told reporters, “We’ve got many good candidates. I know that the president will look at this job and the several other jobs that are created as part of this legislation and make an announcement.”

Warren’s appointment could be one of the few meaningful victories for consumers in the aftermath of the Wall Street deregulation disaster. She is not your typical accommodating political appointee. She does not appear likely to “play ball” with Team Obama or anyone else inside the Beltway when it comes to protecting consumers against the pillaging financial industry. The White House is well aware that once appointed, she would be very hard to fire, especially for doing her job with the zeal it requires. Having never served in such a position, Warren has not yet been tested, so my assessment of her political spine is partly speculation. But if I’m right, she’s at least as threatening as Lisbeth Sander.

June 30, 2010

Around the Web: Volcker Rules – Not!

Filed under: Around the Web, Financial Reform Legislation, Martin Column, Paul Volcker, President Barack Obama — admin @ 10:54 pm

Until the morning of January 21, 82-year-old former Federal Reserve president Paul Volcker had been a lonely and largely ignored figure among President Obama’s economic advisers.

Volcker seemed to be the only one of Obama’s advisers not under the spell of the “too big to fail banks” and their highly touted innovations.

Volcker was especially vocal about protecting the public from the financial world’s riskier innovations. As he told a financial conference last year, “Riskier financial activities should be limited to hedge funds to whom society could say: ‘If you fail, fail. I’m not going to help you. Your stock is gone, creditors are at risk, but no one else is affected.’ ”

It was Volcker who had said that the only financial innovation to benefit consumers in the last 20 years was the ATM card.

But he wasn’t getting much traction with the president and his advisers.

Then the Democrats lost Ted Kennedy’s Senate seat.

In a lurch back toward the populism he had embraced during his campaign, President Obama hastily reached out for Volcker.

During a press conference, the president endorsed something he called the Volcker rule as an essential plank of his financial reform plan. That rule would restrict banks from risky proprietary trades with their own (borrowed) money.

Here’s what the president said:

“Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers.  If financial firms want to trade for profit, that’s something they’re free to do.  Indeed, doing so –- responsibly –- is a good thing for the markets and the economy.  But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”

For a more on proprietary trading and the Volcker rule, read this from Rortybomb’s Mike Konczal and the NYT. For more about why the Volcker rule was a good idea, see this from WSJ’s Dealbreaker.

Obama mentioned the Volcker Rule a couple more times, as did the man who was marshaling financial reform through the House, Rep. Barney Frank.

But neither the president nor anybody else in the Democratic leadership ever mounted a public campaign to make it an essential part of reform. In fact, within a month, the president was already backing off his support of the Volcker rule.

And now, like many other parts of the reform that would have protected consumers and inconvenienced banks, it has been largely gutted.

Bloomberg reports “lobbying by banks and congressmen sympathetic to Wall Street’s views, as well as some administration members in the banks’ defense, trampled the views of Volcker and others who favored a stronger proposal.”

The weaker provisions won’t even go into effect for as many as 12 years.

It would have been one thing for Obama and the Democrats to go down swinging on the Volcker Rule. But they didn’t even put up much of a fight.

If you’re as disappointed as I am with the president’s lack of leadership on this, after he made such a big deal about it, why not let him know?

June 20, 2010

Listening to Our History

Filed under: Action, Martin Column, President Barack Obama — admin @ 11:28 pm

Driving through the west, headed towards home from a cross-country road trip with my wife Stacie and dog Billie, endless hours on the highway, no Internet and not much radio except for hard-right talk.

Hearing the voices passing through the desert states is a grim reminder of the forces we’re up against, who now characterize themselves as the real “community organizers,” who represent the real people.

It’s not just the right wing. Lots of people have adopted the timid trickle-down theories embodied by our political leadership: “Don’t get too tough on BP or they’ll take away our jobs. Don’t cross Wall Street, we need to keep the market stable.”

We’re in Winslow, Arizona, wondering whether a boycott will worsen the dire poverty we see in front of us. It’s easier and more politically expedient to make immigrants the scapegoats for lack of jobs and economic uncertainty than it is to question a system that is seriously out of whack, that offers the biggest rewards to those who gamble on our collective losses without risking their own wealth.

That’s what a big chunk of the financial system like hedge funds and derivatives has become. Cynical and bloodthirsty, producing nothing except profits for the few. And the gesture toward financial reform winding its way through congressional conference committee does little to change that.

I understand the fears of friends and family that the money they have saved and invested over the years will be lost if we challenge Wall Street and the robber barons of our time. The financial industry has shown that if it doesn’t get what it wants it is capable of wrecking our economy and causing great suffering for others. But this kind of blackmail undermines democracy. We deserve a financial system that provides both transparency and financial security.

Traveling through the country, along roads adjacent to rail lines and mile-long freight trains, I kept thinking about our nation’s history and those rare moments of courageous leadership like Teddy Roosevelt tackling the railroad trusts, and FDR and his team creating the New Deal to save the financial system from its own excesses. And the creation of the GI Bill, which was designed to bolster possibilities for people who risked their lives for our country, and had played a huge part in the creation of a vital middle class. These were moments when audacious politics met pragmatic problem-solving.

I attended the Personal Democracy Forum in New York City earlier this month. The topic of the wide-ranging conference was “Can the Internet Save Politics?”

One of the most inspiring speakers was Daniel Ellsberg. Amid all the excitement over the possibilities for political activism and engagement with new social media, Ellsberg reminded us that one of the most important ingredients is the same as it always was: moral courage.

Ellsberg was the Pentagon military analyst who leaked a secret Defense Department account of the disgraceful political decisions that led the country into the Vietnam War and its outcome. Plenty of people on the inside knew what was happening in Vietnam, Ellsberg said, but they had kids to put through college and mortgages to pay. They were not about to step outside the system and jeopardize their careers.

Not everybody has the nerve or inside information to be a whistleblower like Ellsberg. But we can demand a financial and economic system where we don’t have to sacrifice our financial security to those who gamble against our futures.

We can demand that our president delivers on his campaign promise of real change. There can be no real change without confronting corporate power over our government and political system. We are as controlled today by the financial and oil industries as we were by the railroad barons when Teddy Roosevelt took them on. TR said one should speak softly and carry a big stick. President Obama has been doing the opposite. We need to demand that Barack Obama follow TR’s suggestion.

May 5, 2010

The Marx Brothers’ Guide to Financial Reform

Filed under: Federal Reserve, Goldman-Sachs, Lehman, Martin Column, Outrage, President Barack Obama, Too Big To Fail — admin @ 3:47 pm

“Who you gonna believe, me or your own eyes?” asks brother Chico in the madcap classic “Duck Soup.”

It’s the middle of the night in the imaginary European nation of Freedonia. Chico has disguised himself in a scheme to convince a skeptical wealthy widow, the country’s major creditor, that he’s actually the country’s newly elected president (Groucho) to get her to hand over Freedonia’s top secret war plans.

The trouble is Chico’s Italian accent.

And Harpo. He’s disguised himself as Groucho too. And of course there’s Groucho. Three Grouchos. Who’s the real one?

Chico’s line reminds me of the not so funny antics of the Obama administration and our political leadership in their various efforts to convince us that financial system should be left intact and that reform should just be left up to the same regulators who colluded in creating the economic crisis and protecting big bankers’ interests.

That’s essentially what our leaders have proposed, wrapping themselves in the disguise of real reformers.

We may have been blinded for a while by the riches the bankers were offering us but we can see clearly now what they were: a gaudy mirage.

If we didn’t get it when the economy crashed, we get it now, after we toted up the bill from the unsavory wreckage of Lehman Brothers and Washington Mutual, as well as the expense from the equally unappealing survival of Goldman-Sachs.

It’s plain to see that if any bank presidents lost their jobs they were handsomely compensated. None have been forced to face foreclosure or had their unemployment or health insurance cut off.

The rest of us have a choice: believe our leaders or own eyes.

We understand what happened: the bankers got too big and powerful, got rid of all the rules, got greedy and brought the economy down – except for the part that kept churning out gargantuan bonuses to the financial titans.

We understand what we need to do, too: break up the big banks, curtail their power and wall off their gambling games from the economy the rest of us have to live in.

But the leadership that’s trying to control the debate seems hopelessly out of step with the country.

Not all the politicians are as clueless as the leaders. In fact, more than a dozen senators have signed on to what not long ago would have been considered a radical proposal – to audit the Federal Reserve. It already passed through the House by a wide margin.

This terrifies the administration, which doesn’t want any more details leaking out about the favors the Fed has been granting the big banks at public expense.

So the president’s chief of staff, former investment banker Rahm Emanuel, is working the phones. If the administration favored real reform, they’d be stiffening the politicians’ resolve against the massive bank lobbying intended to gut strong regulation. But instead, the president has sent Emanuel out to do the regulators’ bidding, to dissuade senators from voting for a Fed audit.

In the Senate, a handful of senators have proposed a stronger dose of reform than the administration and Democratic leadership have prescribed. But the Senate’s Democratic leaders are squeamish about even allowing their colleagues to debate these more robust proposals.

Meanwhile, the Republican leadership seems to be getting inspiration from the same Marx Brothers’ movie they’ve been glued to since Obama got elected –  “Horse Feathers.” Rep. John Boehner and Sen. Mitch McConnell may not have any ideas of their own but they’ve managed to perfectly capture the spirit of the lead character, Samuel Quincy Wagstaffe (played by Groucho) in his opening number, “Whatever It Is, I’m Against It.”

The Marx Brothers’ wit and wisdom never go out of style but they’re especially timely now. They began their film careers satirizing the hysteria surrounding a real estate bubble: the Florida land boom in “Cocoanuts” in 1929. “You can get any kind of a house you want,” Groucho assures prospective buyers as he auctions off some land of dubious value. “You can even get stucco.  Oh, how you can get stuck-o.”

While he poked fun at speculative investing, in real life Groucho was also a victim. He lost his savings in the 1929 crash. “Some of the people I know lost millions,” he quipped bitterly in his autobiography. “I was luckier. All I lost was two hundred and forty thousand dollars. I would have lost more, but that was all the money I had.”

April 23, 2010

Just Who is Us, Mr. President?

Filed under: Martin Column, President Barack Obama, Too Big To Fail — admin @ 8:37 am

President Obama went down to the playground where Wall Street bullies have been beating up kids and taking their lunch money. He suggested that the bullies should help create rules that would stop them from beating up kids.

How lame is that?

One blogger compared Obama’s timid performance to FDR’s attack on Wall Street for its rabid opposition to the New Deal. But I kept thinking about the other Roosevelt, the one who took on the railroad trusts.

While Teddy Roosevelt was far from perfect, he had his moments: “A typical vice of American politics,” he said, “is the avoidance of saying anything real on real issues.” He could have been talking about Obama.

What we saw on Thursday was a terrible thing: a brilliant and articulate president of the United States unwilling or afraid to tell it like it is.

It’s not the Republican minority who pose the greatest danger to real financial reform. It’s the powerful Wall Street wing of the majority Democrats who don’t want to offend the bankers. Our representatives need to know we want real reform, not just lip service that basically preserves the status quo. Our representatives need to have the courage to support the stronger proposals by Sens. Kaufman, Brown, Shaheen, and Merkley that would do more to actually break up the big banks and put limits on their risky gambling.

Mr. President: Let’s get real. Let’s say out loud that banks and bankers have grown too powerful.

Let’s get real. It’s absolutely not in the banks’ interest to “join us” in supporting reform. By suggesting that as the solution, you are abandon your own credibility and avoid the “real issues” of a government corrupted by those bankers’ money.

Stop negotiating with Wall Street. Cop to their massive financial support for your campaign, and those of your colleagues in Congress. And tell Wall Street change is coming whether they like it or not.

April 20, 2010

Giving Toxic Waste a Bad Name

Filed under: Action, Glass-Steagel, Goldman-Sachs, Martin Column, President Barack Obama — admin @ 5:11 pm

Face it, if we found out that a Vegas casino was run like our banking system, the worst strung out addict wouldn’t gamble there.

Even they wouldn’t be able to stand the stench.

Casino operators know you have to provide at least the appearance that the games aren’t crooked.

Casino operators know they can’t force people to spend their hard-earned money gambling on a toxic waste dump.

But the bankers and their political cronies who have been playing us for suckers forced us to pay to clean up the shambles, as well as the continuing costs of the broken economy.

Now the casino operators are trying to assure us that everything is hunky-dory but that same foul scent is still wafting from their dumpsite. Goldman Sachs shrugs off  the Securities and Exchange Commission’s fraud charges, hiring the president’s former lawyer to fight them, while it rakes in eye-popping profits that beat even the most optimistic projections.

The man we hoped would clean up the mess, President Obama, appears at long last to be taking a more nimble, hands-on approach to financial reform than he did on health insurance reform. But the plans endorsed by him and the Democratic leadership contain too little actual reform and too much reshuffling of the same weak hand regulators have been bringing to the casino.

We’ll never win against the sharks the way the game is rigged now.

That’s the bitter lesson brought home by the revelations of the last month, from probes into the tragic bank follies of the Lehman and Washington Mutual collapses, and the  SEC lawsuit charging Goldman-Sachs with fraud.

As we learn more details of each of these debacles, they provide potent weapons  in the fight to overhaul the system that led to the financial meltdown.

Far from being a unforeseeable natural disaster, it was a predictable consequence of the system we still have in place today. In each case, the financial giants rigged the game with fraudulent bookkeeping and lack of disclosure while regulators looked the other way. And far from being isolated instances of improper conduct, the Lehman, WAMU and Goldman fiascoes are prime examples of how far the financial industry has fallen in common sense and ethical standards.

But the Democrat leadership has squandered its credibility on financial reform, offering legislation that largely preserves the status quo.

Rather than galvanizing public outrage against Wall Street into support for fundamental change to rebuild a financial system that truly serves our economy, the president and the Democratic leadership are caving in to Wall Street lobbyists and Republican obstructionists who pay lip service to reform while they block and dilute it.

Meanwhile, we’re treated to the truly disgraceful spectacle of each party accusing the other of having taken more campaign cash from Goldman-Sachs and the other major casino operators than the other.

The truth is they’re both beholden to the cash generated by the toxic dump of our financial system. The Democrats may be ahead in the fundraising game right now, but the Republicans are working hard to curry favor from Wall Street and catch up.

Meanwhile, the rest of us are left on the sidelines.

Fortunately we don’t have to stay there.
Several other Democratic senators have proposed amendments worthy of support.

Among the most articulate voices for a stronger version of reform is Sen. Ted Kaufman, D-Delaware. Along with senators Jeff Merkley, D-Oregon, Carl Levin D-MI, Sherrod Brown, D-Ohio and Jeanne Shaheen, D-N.H., Kaufman has proposed a bill that moves toward rebuilding the wall that used to separate traditional, federally guaranteed banking activities from high-risk speculative gambling. That wall was torn down when the Depression-era Glass-Steagall Act was repealed during the Clinton Administration. In addition, a conservative Democrat who faces a tough reelection fight, Blanche Lincoln, D-Arkansas, has proposed derivatives regulation that is substantially tougher than that which has been proposed by the Obama Administration.

Now is the time to clean up the casino. We have to channel our  genuine, justified anger into action to push our politicians to do the right thing, whether they want to or not.

March 12, 2010

Tea Party For Two

Filed under: Consumer Financial Protection Agency, Martin Column, Outrage, President Barack Obama — admin @ 6:30 pm

Is the Democratic Party obsolete?
That’s the question that keeps nagging me as I watch President Obama and the Democratic leadership fumble away their opportunities to fight for meaningful reform of health care and the financial system.
The president and congressional leaders consistently shy away from fighting for reforms they themselves propose, such as the public option or the consumer financial protection agency.
They obsess over whether someone will accuse them of partisanship, or whether they will spook the markets if they crack down on reckless profligate bankers. They appear to find any excuse to avoid pushing the kinds of fundamental of changes that would challenge the health care and financial industry.
I don’t think you can blame the Republicans, whatever their own faults. They oppose reform. They’re fighting Obama and his policies as a way to regain power. They’re pursuing that opposition determinedly, and they’re betting it will pave their way back to a majority. It’s not the Republicans’ fault if they set traps for the Democrats and the Democrats continually fall for them.
Members of the Democratic leadership have shown profiles in cowardice when it comes to fighting for any reforms opposed by the insurance or financial industries. In the latest display, House and Senate leaders are furiously trying to blame the other for the death of the public option, even though it’s supported by a majority of Americans and even 40 members of the U.S. Senate.
But the insurance companies have fought the public option, which would provide those forced to buy health insurance under reform an alternative to private insurance. So the Democratic leadership has shown determination to find a way to eliminate the provision without leaving their fingerprints on the corpse.
The same with financial reform, where the Democrat leadership has zigged and zagged but has won’t fight for strong independent consumer protection or meaningful regulation of the complex investments that blew up in the meltdown. Sen. Chris Dodd, the long-time friend of insurers and financial titans who serves as Senate Banking chair, flirted with a strong reform proposal when he was running in a tough reelection campaign. But he backed off after he decided to retire and now appears ready to resume his traditional role in service to the bankers’ lobby. As an industry publication recently noted, insurance companies will miss Chris Dodd.
The Democratic leadership don’t seem to stand for any strong principles.
The president and Democratic leaders pay only lip service to the deep anger in the country over the erosion of the middle class, and the bank bailout that pumped up Wall Street while leaving Main Street on life support. The Democrats fear that anger because they know that their own Wall Street-friendly policies have helped fuel the series of speculative bubbles that brought prosperity and then a crash that wiped out the financial security of millions of Americans.
The president and his party are banking that the economy will improve enough by later this year, and 2012, to blunt voters’ anger.
If it does, the Democrats will claim credit for setting the economy right without having unduly upset their contributors in the financial and insurance industries. Even better for the Democrats, they will be able to bolster their fundraising by showing how they hung tough against the call for stronger reforms.
The Democrats came into office promising not to “waste a crisis.” But their efforts to reform health care and the financial system and to put Americans back to work have shown a distinct lack of urgency.
Could there be another way?
Obama will face voters on the 100th anniversary of the last presidential election in which a third-party candidate beat a major party candidate. The third-party candidate was a former president, Teddy Roosevelt, running on the progressive Bull Moose ticket promising to bust up the powerful big corporations of the day, known as trusts. Roosevelt was angry that the president who followed him, Republican William Howard Taft, hadn’t followed in his activist political footsteps. The former president was not afraid to show his ire, calling on his followers to launch “a genuine and permanent moral awakening.”
Taft, for his part, favored a laissez-faire policy toward business and regulation that resonates with the era that we’ve been through. “A national government cannot create good times,” Taft said. “It cannot make the rain to fall, the sun to shine, or the crops to grow.” But by meddling, government could “prevent prosperity that might otherwise have taken place.”
Sound familiar?
Roosevelt lost the election to Woodrow Wilson, but he got more votes than hands-off Taft.
Today the tea party is rumbling on the right, threatening revolt against the Republicans. There’s already the beginnings of a coffee party. If the economy doesn’t cooperate with the Democrats, the tea party’s discontent could be just the beginning of the end of the two-party stranglehold on our government.

February 23, 2010

Strong Financial Consumer Protection Not Optional

Filed under: Consumer Financial Protection Agency, Martin Column, President Barack Obama — admin @ 7:54 pm

While a key Democrat has been wobbling in his support for an agency to protect financial consumers, President Obama and members of his administration have recently come out strongly in support.

But will they fight for it in the face of relentless opposition from bank lobbyists, Republicans and Blue Dog Democrats?

The Obama administration’s abandonment of the public option in the health care debate provides a grim omen for the financial reform battle.

Some have compared the public option to the Consumer Financial Protection Agency. Both enjoyed broad public support but have been fiercely opposed by the businesses they would challenge: insurance companies fought hard against the public option while financial institutions fiercely oppose the consumer protection agency.

Aside from industry opposition, the public option and the CFPA shared the potential to provide a shield for consumers against abuses.

At various times, the president also supported the public option. Today his spokesman said the public option just didn’t have the votes. But that assessment was something of a self-fulfilling prophecy. There’s little evidence that President Obama put much pressure on legislators in support of the public option, and his ambiguity in public didn’t help it, either.

After initially supporting the public option, the president signaled it was not a crucial aspect of health-care reform.

But the public option offered the only potential check on the insurance companies, which are about to get a glut of new customers forced to buy policies from them. Democrats are suggesting a tepid combination of subsidies and insurance cooperatives that won’t provide meaningful accountability for the insurance companies.

Now Republicans are digging in their heels in opposition to the CFPA, with the usual rhetoric about wasteful government bureaucracy. It’s nothing but a thinly disguised fundraising pitch to woo the financial industry back from Democrats. Chris Dodd, soon to be retired head of the Senate Banking Committee, has suggested the consumer protection function might co-exist within some other agency. That’s a very bad idea. Just look at how much consumer protection the Federal Reserve, Treasury Department and other agencies accomplished in the housing bubble and its aftermath.

If that’s not enough to convince you, look at the recent shenanigans by banks and credit card companies piling on new fees.

The New York Times reported this morning how banks are getting ever more aggressive in socking their customers with higher over-draft protection fees. Credit card companies, even in the face of new regulations, are finding new ways to gouge their customers, charging fees for paying off your card on time, or even charging fees for not using a card.

There’s nothing stopping from Treasury and the Fed from using their bully pulpits to rail against these continuing abuses now. But they don’t. They ignored warnings about predatory lending during the housing bubble and have shown no stomach for protecting consumers since the economic collapse.

Dodd is supposed to unveil his latest version of financial reform this week. Let President Obama and your senators know that you won’t be fooled by financial reform in name only. Whether President Obama is capable of staying the course we don’t know. But we do know we need a strong, independent Consumer Financial Protection Agency.

February 4, 2010

Less Kabuki, More Reform

Filed under: Consumer Financial Protection Agency, Martin Column, President Barack Obama — admin @ 7:44 pm

Does the president get it yet on financial reform?

Or is his tougher stance toward the bankers part of a kabuki performed for the public while real reform is compromised away backstage?

The politics around the battle for a Consumer Financial Protection Agency are thick with intrigue and shifting positions.

A separate agency is a crucial aspect of any reform because the present regulators have done such a dismal job of protecting consumers’ interests.

We have every right to be suspicious of the president and the Democrats, based on their timidity in fighting for stronger regulation and holding accountable those responsible for the crisis.

The latest cause for doubts stems from the unsavory spectacle of Democrats and Republicans falling over themselves to reassure Wall Street that they are the bankers’ best bet to represent the interests of the financial industry.

Meanwhile, the president appears be jawboning the key Senate author of reform, Chris Dodd. A long-time recipient of Wall Street largesse, Dodd was facing a tough reelection campaign, based on some of his more unsavory dealings with Wall Street. In the midst of that campaign last November, he came out with a tough reform proposal, including an independent Consumer Financial Protection Agency.

But as his campaign looked increasingly hopeless, Dodd decided to retire. Since then he’s been signaling that he wants to back off the independent consumer agency.  President Obama met with Dodd last month and insisted that the independent agency is “non-negotiable.”

President Obama has his own changing political calculations. He originally supported a milder version of bank reform passed by the House. After the Democrats lost Ted Kennedy’s Massachusetts Senate seat several weeks ago, the president all of a sudden decided to haul out his lone financial adviser who has advocated breaking up big banks, former Fed chief Paul Volcker. (Previously Obama had been ignoring him, letting a cast of Wall Street insiders run his handling of the banking crisis.)

Obama, with Volcker by his side, voiced support for breaking up the largest big banks as well as placing some new limits for some of the banks’ riskier activities.

Earlier this week at a Senate hearing, Dodd aimed unusual criticism at the president, questioning the timing of his announcement, labeling the president’s embrace of Volcker’s ideas “transparently political.”

Dodd didn’t stop there: he suggested that the president’s proposals to get tough on the big banks threatened the process of crafting a reform proposal that would get bipartisan support.

Key Republicans have already indicated what that would mean – no independent consumer financial protection agency, for one thing.

The Democrats are caught: The bankers who fund their campaigns are demanding watered-down reform that will ensure business as usual. Angry voters are demanding robust regulation and accountability.

The president has to demonstrate that his embrace of Volcker’s ideas isn’t just a gimmick. He’s got to flesh his proposals out with details and fight for them in public and not compromise them away in the back rooms.

Contact the president and let him know what you think. Let your senator know, too, that you’re tired of political theater. It’s past time for real reform.

January 28, 2010

Urgent Challenges, Modest Responses

Filed under: Martin Column, President Barack Obama — admin @ 2:16 am

The good thing about President Obama’s state of the union speech is that he acknowledged the public’s anger over the financial crisis.

The bad thing is that he appears to reject it. “Look,” he said. “I’m not interested in punishing banks.”

As expected, the president put the rhetorical focus on jobs and the economy in his state of the union. But the actual proposals, a combination of tax cuts and subsidies were relatively modest. But the combination of his proposed freeze on most discretionary spending and continuing Republican opposition make the possibility of dramatic improvement in jobs and the economy unlikely. The speech didn’t contain the kind of dramatic response that 18 percent real unemployment and a continuing foreclosure crisis demand.

President Obama insisted he would veto any financial reform that wasn’t real. But didn’t spell out what that might mean. Does that mean he’ll veto financial reform that doesn’t contain a Consumer Financial Protection Agency or meaningful derivatives regulation? The president didn’t say. He also didn’t pledge to fight for any specific reforms in Congress. The only specific he mentioned was his proposed bank fee to recoup costs of the bailouts.

President Obama blames his legislative frustrations on his own inability to fully explain his policies. But the president who has repeatedly promised no more business as usual remains afraid to tap into, and act on, the public’s honest passion for real change.

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