Thursday, March 4, 2010

Real Financial Reform In Serious Danger

Following the model set by the Health Care negotiations, the most important part of the financial reform bill could be gutted in the Senate:
Consumer advocates are reacting harshly to a compromise Consumer Financial Protection Agency being proposed by Banking Committee Chairman Chris Dodd (D-Conn.).

HuffPost and other media outlets have obtained a copy of a memo outlining the proposal that Dodd sent to committee members this weekend. Read the memo here.

Under Dodd's plan, "[t]he agency proposal would be dropped." Consumer groups and labor unions had been pushing for independence as key to the agency's success. Bank regulators, they argued, should not have authority to veto consumer protection rules, because they have the interests of the banking sector as their central priority, rather than concern for abusive practices.

Consumer groups also wanted a presidentially-appointed head of the agency and an independent funding stream. Dodd's proposal includes both of those. But without independence, the agency loses its ability to write or enforce strong rules.
It's good to know that Senator Dodd's love of the banking industry is so deep that he'll continue to be in their pocket even when he doesn't have to worry about reelection. Elizabeth Warren has it right about idea about how to deal with Dodd and the rest of the Senate:
"My first choice is a strong consumer agency," the Harvard Law professor and federal bailout watchdog said in an interview with the Huffington Post. "My second choice is no agency at all and plenty of blood and teeth left on the floor."
Without an independent consumer agency, it isn't real financial reform, and this is a fight we need to pick. From the early signs of it, the White House might be getting the message:
WASHINGTON (AP) -- The Obama administration waded into negotiations over Wall Street regulations Wednesday, calling for limits on the size of financial institutions and insisting that consumer protections remain a central objective of legislative attempts to rein in the industry.

The plan reiterated a proposal that the administration staked out in January. The measure is known as the Volcker Rule, after former Federal Reserve Chairman Paul Volcker, a vigorous proponent of limiting proprietary trading by commercial banks. Volcker has been advising the Obama administration.
This is a massive departure from the previous actions the Administration has taken on Banking policy, which is great news. The other encouraging news is people such as Paul Krugman have already begun saying that no bill is better than Dodd's gutted bill. If those threats start to be taken seriously, then it could get the momentum for a bill going back in the right direction.


  1. This comment has been removed by the author.

  2. "The other encouraging news is people such as Paul Krugman have already begun saying that no bill is better than Dodd's gutted bill."

    i really wouldnt have assumed that we'd hear the phrase "no bill whatsoever would be better than this bill" this often with republicans so thoroughly out of power, but here we are.

  3. personally, my favorite here is
    "...'My second choice is no agency at all and PLENTY OF BLOOD and TEETH LEFT ON THE FLOOR.' said the HARVARD LAW PROFESSOR and FEDERAL BAILOUT WATCHDOG..."[emphasis added]

    I don't recall very many explicit calls for blood from Harvard law professors in recent history... but I like it.