In 2006 the American Bankers Association argued vociferously in favor of separating consumer protection function from the “safety and soundness of banks” function.  However, now that it is about to happen the banks have had a change of heart in light of the fact that separating the two would no longer allow them to fleece consumers for profit.  TARP watchdog, and my hero, Elizabeth Warren recently penned an op-edabout the necessity for a Consumer Financial Protection Agency and calling the ABA on its hypocrisy.

ABA lobbyists now aggressively insist that separating consumer protection and safety and soundness functions would unravel bank stability. Yet just a few years ago, they heatedly argued the opposite — that the functions should be distinct.

In 2006, the ABA claimedto act on principle as it railed against an interagency guidance designed to exercise some modest control over subprime mortgages. It criticized the proposal for “combin[ing] safety and soundness guidance with consumer protection guidance, creating confusion that is best addressed by separating them.”

The ABA went on to argue that the “marriage of inconvenience between supervision and consumer protection appears to blur long-established jurisdictional lines.” And then: “ABA recommends that the safety and soundness provisions relating to underwriting and portfolio management be separated from the consumer protection provisions.”

Read that again: The ABA in 2006 said that policymakers should separate safety-and-soundness and consumer protection — exactly the opposite of its position today.

This 2006 memo illustrates the ABA’s real consistency — consistent opposition to meaningful reform.

If there is a smoking gun in the battle over financial regulatory reform, the 2006 ABA memo is it….

In the weeks ahead, the Senate does not need to decide between safety and soundness and consumer protection.

But the ABA is right about one thing: The Senate does need to decide between banks and families.

Attorney barred in the District of Columbia and California currently looking for opportunities in the private and government sectors.  Specializes in ediscovery/litigation efficiency project management but can do straight litigation or litigation management.  Feel free to contact me with opportunities at progress@progresspolitics.com