That the GOP and some Bank Supported Democrats would fight so hard to remove or weaken a Consumer Protection Agency speaks volume for the need of removing corporations completely from the ability to fund campaigns. Government that works dictates the need for a Consumer Protection Agency within the government whose interest is the interest of we the people.
It’s time for senators — especially the Republicans — to square their upcoming votes on financial reform with their long-professed desire to protect families, said consumer advocate and federal bailout watchdog Elizabeth Warren on Wednesday in an interview with the Huffington Post. "Everyone in Washington claims to be on the side of families and to support reform," said Warren, a member of the 2010 TIME 100 list of the world’s most influential people. "But the test is who votes to paper over problems with another regulatory system designed to fail and who votes for real Wall Street accountability even if it means that some donors will be disappointed.
"I’m tired of hearing politicians claim to support families and, at the same time, vote with the big banks on the most important financial reform package in generations. I’m deep-down tired of it."
Of all the proposals in the 1,400-page Senate bill attempting to reform Wall Street and protect American consumers, none is more contentious than the one calling for the creation of a consumer-focused agency dedicated to protecting borrowers from abusive lenders.
Reform-minded Democrats want a powerful independent entity able to defend powerless families from the banks and financial firms that squeeze profits out of customers through tricks, traps and outright predatory loans.
Moderates want to say that they voted for a bill that protects consumers — even if it really doesn’t.
Republicans profess a desire to protect consumers, acknowledging regulators’ past failures, but they also don’t want to stem the flow of credit or needlessly harm lenders’ ability to make a buck.
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The Senate bill, authored by the banking committee’s chairman, Christopher Dodd, a Connecticut Democrat, calls for a consumer entity to be housed inside the Federal Reserve. It largely, though, adheres to Warren’s four tests: a chief appointed by the president, an independent source of funding, the authority to write consumer rules and the ability to enforce them against unscrupulous lenders. The unit, thus, focuses squarely on consumers. Ensuring banks’ profitability is left to banking regulators.
The Republicans’ counter-proposal, released this week, fails all four of Warren’s tests.
It calls for a council led by the heads of the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve. They’d issue rules, supervise "our nation’s largest financial institutions, large non-bank mortgage originators, and other financial services providers who have violated the consumer protection statutes," and enforce the rules.
Warren isn’t thrilled with the idea of allowing bank regulators — whose top priority is to ensure the profitability of the nation’s banks — to continue to oversee consumer protection, particularly when the OCC is involved.
"The problem with consumer protection is structure. Our current consumer regulatory process is designed to fail, and if we don’t fix it, it will fail again," she said. "In every major dispute between customers and banks, the OCC entered the fray on the side of the banks. Clearly, banks — not their customers — were the OCC’s primary interest. The idea that the OCC would now be in a position to veto the new consumer agency is shameful.
"If our goal was to take any lessons from the crisis, we would do the reverse: Let’s give a consumer regulator a veto over the OCC," Warren added. After all, "it wasn’t a consumer regulator who presided over the biggest financial meltdown in generations."
She didn’t hold back in singling out the GOP’s plan, which the Harvard Law professor and bankruptcy expert said was "pure genius — for the banks who want to keep running things."
"The substitute language on consumer protection is designed to paper over very real structural problems with a new system that is designed to fail as much as the status quo is," Warren said. "The whole idea of the substitute is to take a bunch of regulators that already failed and throw them in a committee together."
Asked if she thought Republicans such as Senate Minority Leader Mitch McConnell of Kentucky and Richard Shelby of Alabama are trying to protect families from predatory lenders, Warren let loose.
"It isn’t possible to protect families and at the same time to paper over the sorts of problems that led to the crisis with just another system that is designed to fail," she said of the duo leading the GOP effort against the consumer agency. "The time has come for choosing."
With Republicans abandoning their effort to prevent Dodd’s bill from being considered on the Senate floor (the bill passed a procedural hurdle on Wednesday), senators will soon begin offering and debating amendments.
