Where’s Our Money

Frontline/NYT investigate the massive consumer loan industry – the history, the new rules, and what’s ahead for banks and consumers.

“We have always known that heedless self-interest was bad morals; now we know that it is bad economics.”

Franklin Delano Roosevelt

Dodd moves to scale back Consumer Financial Protection Agency plan

In an attempt to lure the Republican votes needed to get a sweeping overhaul through the Senate, the Banking Committee chief is circulating a plan for a less powerful Bureau of Financial Protection.

– Los Angeles Times, March 2, 2010

Dodd Proposes Financial Protection Committee Housed in Treasury Department

In new attempt to lure the Republican and Democrat votes needed to get semi-sweeping overhaul through Senate, the Banking Committee chief is circulating a plan to create a Financial Protection Committee inside the U.S. Treasury.

– Los Angeles Times, March 28, 2010

Dodd Proposes Professor of Financial Protection at University of Connecticut

In renewed attempt to lure the Republican and Democrat votes needed to get modest financial fixes through Senate, the Banking Committee chief is circulating a plan to give the University of Connecticut $150,000 to hire a professor to teach the public about financial protection.

– Los Angeles Times, April 15, 2010 read more

The Obama administration, which has increasingly been adopting a can’t do attitude when it comes to putting real teeth into financial regulation, now wants to take out the teeth already in place.

Treasury officials are signaling they’d rather not have the same aggressive special inspector general overseeing the $700 billion federal bailout anywhere near their new $30 billion bank subsidy to encourage lending to small business.

I wrote about that inspector general, Neil Barofsky, a couple of weeks ago, suggesting he was one of the few public officials actually trying to protect our money rather than just acting as a rubber stamp for Wall Street’s raid on the U.S. Treasury.

Barofsky has issued a series of scathing reports raising questions about federal officials’ handling of the Troubled Asset Relief Program….read more

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….read more

Read Reuters’ economic blogger Felix Salmon’s intriguing takeaway from the weekend’s depressing news that Repubs have rejected even Chris Dodd’s watered-down, weakened version of the financial consumer protection agency. Salmon’s prescription: the Dems should accept whatever the key Republican senators, Richard Shelby and Bob Corker, want. It won’t be that much worse than Dodd’s current “toothless” proposal is now.

Then, consumer advocate Elizabeth Warren should team up with a non-governmental organization like the Center for Responsible Lending and perform the function of a real independent consumer financial protection agency, warning people about particularly bad loans or institutions that are rip-offs, and commending good ones….read more

The near calamity on Christmas

Day capped a year – a decade – when the ability of our government to protect its people was tested and, when it counted most, failed.

As Maureen Dowd at the New York Times put it: “If we can’t catch a Nigerian with a powerful explosive powder in his oddly feminine-looking underpants and a syringe full of acid, a man whose own father had alerted … read more

One thing is clear: Citigroup executives thought they had a deal with the government to pay back their bailout money so they could pay themselves as much as they wanted.

Then it all started to unravel. The Washington Post disclosed that the IRS granted Citigroup huge tax breaks (meaning billions) as part of the exit strategy the “too big too fail” bank worked out with Treasury officials.

After that the stock market rejected the government and Citigroup’s assessment of the bank’s health and the deal fell through … read more

Declaring Independence on Consumer Protection

March 1, 2010

Are the Republicans really thwarting the Democrats? Or do Democrats not get anything done by design? Salon’s Glenn Greenwald tells you how and why the Democrats have perfected ineffectiveness and timidity into a high art. Read it and weep. …read more

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