Rightly so.

Katrina over at the Nation magazine tweeted the following:

WH (& others) indicate Elizabeth Warren 2 be nominated next week to head Consumer Financial Protection Agency. Kudos 2 all who worked 4 her.

If the White House wants to motivate the base and independents for the midterm elections this is a step in that direction. 

NOTE: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

The people have spoken and they WANT Elizabeth Warren as the head of the Consumer Financial Protection Bureau.  Sorry Geitner, you LOSE!   Listening to CSPAN this morning you would think that we have a single political party in this country.  When C-SPAN posed the question of  “should Elizabeth Warren run the Consumer Financial Protection Agency [Bureau]” something like 99 percent of all the callers, Democrats, Republicans, Independents, and Libertarians, from all over the country voiced their enthusiastic support for Elizabeth Warren to lead the new bureau.  As a long time listener to Washington Journal this was a first!  It was fantastic to hear that people see the greatness in this woman that I have been preaching for the last eighteen months.  Warren is a lifetime advocate for the consumer and is the only person who can be trusted with shaping this new agency in the spirit of its genesis.

This is also very important to the American people being that the Bureau’s focus will be consumer protection.  This is the Wall Street police and Elizabeth Warren is the only CREDIBLE person who can walk the beat.  The President should know that for people to think he is serious he must choose the right person for this job.  This is Elizabeth Warren’s brainchild and for her not to be the first person to lead it and set the tone would be a travesty to her as a loyal supporter of this administration and a travesty to the consuming public.  The only folks who are alleged to have a problem with Warren are Geitner (because he wants his asst treasury secretary for the position and Warren calls him on his BS), Wall Street (who wants a competent cop with integrity), and the GOP (Wall Street enabler).

Main Street or Wall Street?  Elizabeth Warren has proven that she is most definitely Main street.  If the President’s goal is to look out for Main Street neither of the other two candidates in contention  will do it as well as Warren. Warren is a trustworthy, independent, common sense voice who has the backs of the American people.  We will know how serious the President is about consumer protection and this Bureau when he makes this pick.

We trust Elizabeth Warren similar to the way we trust you Mr. President.  Please don’t let us down.

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

If there is any chance of the Consumer Financial Protection Bureau being competent and effective it MUST have Elizabeth Warren at its helm.  The fact that Treasury Secretary Tim Geitner opposes Warren reinforces the above conclusion.  Wall Street has been lobbying against Warren since her name was first mention as the only person to lead it.  Geitner with his friends in the financial industry are prefer to rule unfettered.   Big old Wall Street fears Elizabeth Warren and that is exactly the way it should be.  As Chairman of the TARP oversight committee Elizabeth Warren held Wall Street executives and Tim Geitner’s feet to the fire.  This is the only person capable and credible enough to fight on behalf of the American consumer.  Take a look at why Geitner fears Warren:

While her grilling of Geithner in September, over what members of Congress have called the “backdoor bailout” of Wall Street through AIG, inspired the “squirm” video, just last month Warren pressed Geithner on the administration’s lackluster foreclosure-prevention plan, Making Home Affordable. Criticizing him for Treasury’s failure to keep families in their homes, she questioned Treasury’s commitment to homeowners.

Warren’s persistent oversight is part of the reason for Geithner’s opposition, according to the source.

And another reason for Geitner’s opposition and why Warren is the ONLY person for this job

Geithner’s objections to Warren taking over that role also involve her views on Wall Street, sources say. The longtime professor believes the nation’s megabanks are Too Big To Fail and have been among the biggest abusive lenders in the country. Her toughness on giant banks is said to be a longtime source of tension with Geithner.

The words of our President:

“The truth of the matter is that the banking industry has used credit cards and pushed credit cards on consumers in ways that have been very damaging,” Obama said according to a transcript. “There’s a woman named Elizabeth Warren who’s a professor at Harvard who did a great deal of study around this. And she made a simple point. You know, if you bought a toaster, and the toaster blew up in your face, there would be a law, a consumer safety law, that would protect you from buying that toaster. But if you get a credit card that blows up in your face, that starts off at zero-percent interest, and once they kind of suck in the — buying a bunch of stuff and suddenly it’s 29 percent; and if you’re late two days, suddenly, you know, you just paid another $30, and all kinds of fine print that a lot of folks didn’t understand — well, somehow that’s okay.

“I think generally having some consumer safety, some consumer protection around credit cards, is important,” Obama added.

This really is non-negotiable.  If the Obama administration is serious about consumer protection Elizabeth Warren must head the CFPB.

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

It was reported yesterday that Nebraska Senator Bill Nelson of “Nebraska kickback” fame held out on the financial reform bill because he had concerns about Elizabeth Warren being appointed to head the pending Consumer Financial Protection Bureau.  Are you kidding me???  Elizabeth Warren is the only person to head the new Bureau.  Warren is the only one that can be trusted not to capitulateto the Federal Reserve and corporate interest.  Therein lies corporate captured Nelson’s issue with Warren as the head of the new Bureau.  Warren’s focus and priority will be protection of consumers and that represents a huge problem for Nelson’s corporate special interest.  If the Administration puts the interest of consumers first it will choose Warren and Nelson’s input will be an empty gesture on its part.  Warren has the skill, knowledge, and dedication to get the job done right.  There is no other person for this job.

Sen. Ben Nelson (D-NE) explicitly told reporters this evening he’s not committed to voting for the legislation, citing a handful of measures, and concern about potential future directors of the Consumer Financial Protection Bureau.

“You don’t know who’s going to be head of the consumer protection bureau,” Nelson said after a vote. “You can’t just send a rogue agency out on its own.”

An agency that sole purpose is protecting consumers is a rogue agency???

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

The only clear choice to head the Consumer Financial Protection Bureau if Elizabeth Warren.  The whole idea is her brainchild and it is crystal clear that her focus will be consumer first.  Warren also has the chops to back up her position.  Because it has been suggested that many of the employees will come from existing agencies we need someone at the head who has a clear vision of the Bureau’s purpose and mission.  The last thing that American consumers need is for the Bureau to be captured by agencies such as the Federal Reserve and the Treasury department.  It would defeat the purpose of the Bureau and put us back in the same place we were prior to its existence. 

Once under way, the agency is likely to be the most visible manifestation to consumers from the extensive financial-regulatory legislation expected to clear Congress next week. It will write rules on checking accounts, credit cards and mortgages. It will field complaints from the public about lending practices. It will enforce its rules across the economy, from big banks to credit counselors—though not auto dealers, which won’t fall under the agency’s supervision, after much lobbying.

The president’s choice of a director, subject to Senate confirmation, is almost certain to be controversial, given the power of the position and the fight over whether to create the agency in the first place.

Like Joseph Kennedy Sr., the first chairman of the Securities and Exchange Commission, the new director will shape the powerful agency’s public image, initial priorities and starting lineup.

Democratic leaders in Congress say their top pick for the post is Elizabeth Warren, the high-profile Harvard law professor and an outspoken critic of what she sees as a too-cozy relationship between government and bankers.

Some of the candidates mentioned are:

Michael Barr, a Treasury assistant secretary and University of Michigan law professor; Attorneys general Martha Coakley of Massachusetts, Lisa Madigan of Illinois and Lori Swanson of Minnesota; Susan Wachter of the University of Pennsylvania’s Wharton School; and Nicolas Retsinas of Harvard’s Joint Center for Housing studies.

Elizabeth Warren is the ONLY choice.

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

Elizabeth Warren spoke out yesterday regarding the state of the Consumer Financial Protection Agency now more likely to be called the Consumer Financial Protection Board.  The CFPB still has an independent director, an independent and permanent source of funding from the Federal Reserve that cannot be cuttoff by Congress, and independent authority to write and enforce rules.  We still do not like that the Board will be housed inside the Federal Reserve however.  Nor are we happy that a council of regulators consisting of  the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the Commodities Futures Trading Commission have veto power over rules drafted by the CFPB if two-thirds of such regulators believe the proposed rule would jeopardize the “safety and soundness” of banks. 

However, though the automobile lenders carve out is very disappointing to Warren she still believes that there is enough meat in the bill for the Board to be effective. 

“I’m disappointed that Congress seems to be taking the side of auto lenders and big banks over the Pentagon, community banks, and all the public interest groups that oppose an auto dealer carve-out, and there are some other problems as well,” said Warren. “But right now the bureau has the authority and the independence it needs to fix the broken credit market. I keep waiting for an incoming missile that means the banks have won their fight to destroy this consumer agency, but that hasn’t happened so far — and I don’t think it will.”

Republicans are still siding with the banks and maintaining that an independent agency goes too far and consumers should not be protected from the deceptive lending practices of financial institutions.  Remember, this is how they will rule if they gain majority.

Republicans proposed an amendment that would prevent Warren from heading the agency but it failed miserably.  Elizabeth Warren is the ONLY person to head this agency.

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

Financial regulatory reform bill, a comparison of both the House and Senate versions.

OVERSIGHT

–Senate: Creates a nine-member Financial Services Oversight Council made up of the treasury secretary, Federal Reserve chairman, a presidential appointee with insurance expertise, heads of regulatory agencies and a new consumer protection bureau that would monitor financial markets and watch for threats.

–House: Creates an 11-member council with similar duties.

CONSUMER PROTECTION

–Senate: Creates a Consumer Financial Protection Bureau within the Federal Reserve to police lending, taking powers now exercised by various bank regulators. Those regulators could appeal bureau regulations to the oversight council, which could veto the regulations with a two-thirds vote. Federal regulators could override state consumer laws on a case-by-case basis. Currently states have a more difficult time applying their laws to national banks. Excludes from oversight any small business that does not engage in financial services.

–House: Creates a stand-alone Consumer Financial Protection Agency to police lending. There’s no process to veto agency regulations. State law provision is similar to Senate’s. Specifically excludes from agency oversight real estate brokers and agents, accountants and tax preparers and auto dealers.

FEDERAL RESERVE

–Senate: The Federal Reserve would retain supervision over bank-holding companies and state-charted banks. It also would police large, interconnected nonbank institutions that the oversight council determines could pose a threat to the economy. With council approval, the Fed could break up large, complex companies that pose a grave threat to the financial system. The Government Accountability Office, Congress’ investigative arm, would conduct a one-time examination of the Fed’s emergency lending to financial institutions in the months surrounding the 2008 financial crisis.

–House: The Federal Reserve would lose consumer protection regulation authority and ability to unilaterally inject money into financial institutions. The GAO would be given broader power to conduct audits of the Fed.

CAPITAL STANDARDS

Senate: Banks with more than $250 billion in assets would have to meet capital standards at least as strict as those that apply to smaller banks. Banks would not be able to include as top tier capital certain securities that are tax deductible subordinated debt.

House: Any large bank holding company identified as posing a potential risk to the economy would be required to put up additional capital — more money and assets on hand. In computing capital requirements, regulators would include a bank’s off-balance sheet activities, such as trusts held for clients. These companies also would face a leverage cap of 15-1 debt-to-net capital ratio.

DERIVATIVES

–Senate: Trades of derivatives, the complicated financial instruments blamed for accelerating the Wall Street crisis, would have to take place in regulated exchanges. Banks would have to spin off all their derivatives business into subsidiaries.

–House: Also regulates derivatives, but contains more exceptions for corporations that use derivatives as a hedge against price fluctuations, not as a speculative investment. The House does not require banks to spin off their derivatives business.

BANK RESTRICTIONS

–Senate: Regulators would devise rules to prohibit bank holding companies with commercial bank operations from speculative trading with their own accounts. Large, interconnected companies would have to put more money in reserve.

–House: The oversight council may prohibit any activity, including speculative trading by commercial banks with their own accounts, if it finds that the activity could threaten the stability of the financial system. Large, interconnected companies would have to put more money in their reserves.

EXECUTIVE PAY

–Senate: Shareholders would have the right to cast nonbinding votes on executive pay packages. The Fed would set standards on excessive compensation that would be deemed an unsafe and unsound practice for the bank.

–House: Shareholders would have the same right. Regulators would have a say on compensation practices, not on pay itself.

RATINGS AGENCIES

–Senate: An independent board would select ratings agencies to assess the risks of new financial products, replacing a long-standing practice where banks select and pay ratings agencies to rate their new offerings. The bill would also require a wholesale re-evaluation on how the government uses ratings agencies to assess risk. Ratings agencies are blamed for giving too high ratings to bad mortgage-related securities.

–House: Ratings agencies would have to register with the Securities and Exchange Commission and would face increased liability standards.

MORTGAGE LOANS

Senate: Lenders would be required to obtain proof from borrowers that they can pay for their mortgages. The would have to provide evidence of their income, either though tax returns, payroll receipts or bank documents. That provision seeks to eliminate so-called stated-income loans where borrowers offered no proof of their ability to make mortgage payments.

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.

In case there was any doubt that citizens of this nation want Wall Street to be held accountable and the rights of consumers more vigorously enforced, the Consumer Federation of America polling shows that the financial regulatory reform bill needs to be toughened up in terms of consumer protection.

The poll found that 62% of Americans support the creation of a “new federal agency to protect consumers who purchase banking and other financial services.” Only 34% opposed such a plan.

Additionally, CFA found that a whopping 85% believe “consumers need more effective protections against unfair and deceptive practices by banks and other financial institutions.”

The Chamber of Commerce has spent $3 million dollars to fight the creation of the CFPA and elisted Repub;ican leader Mitch McConnell to do its bidding on the Senate floor.  It appears the GOP strategy for November is to side with Wall Street and protect it at all costs.

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

Below is a list of the benefits and drawbacks of the plans for a Consumer Financial Protection Agency/Bureau proposed by the White House, the Senate, and the House as compiled by ThinkProgress.  According to CFPA guru Elizabeth Warren there are four prongs for an effective Consumer Financial Protection Agency:   1) an independent director appointed by the President and confirmed by the Senate; 2) independent budget authority so it is not prone to the whims of the appropriation process; 3) independent rule-making authority; and 4) independent enforcement powers.  What is troubling is the fact that the Senate version does not give the CFPA full rulemaking  authority.  Not sure who would make up this “council of bank regulators” who would have veto power over rulemaking.   We assume it will be folks from the Federal Reserve, FDIC, etc..  Yea that worked so well the last time such regulators were responsible for consumer protection.   This agency would also be housed in the Federal Reserve….also troubling given that proximity can easily lead to co-option.

We should also say that Warren issued a statement today regarding Dodd’s version of the bill that sounded more like a journalist description of an accident then any type endorsement. 

WARREN:  Since bringing our economy to the brink of collapse, Wall Street has spent more than a year and hundreds of millions of dollars in an all-out effort to block financial reform. Despite the banks’ ferocious lobbying for business as usual, Chairman Dodd took an important step today by advancing new laws to prevent the next crisis. We’re now heading toward a series of votes in which the choice will be clear: families or banks.

Send us an email and let us know what you think.  progress@progresspolitics.com

Sen. Chris Dodd (D) broke off negotiations with Sen. Bob Corker(R) yesterday because we would like to think that he came to his senses when seeing Corker’s deal breakers, received a refreshed memory stemming from the HCR fiasco, and due to an outcry from folks like the readers of this website.  Corker was intent on excluding nonbank lenders like finance companies, payday lenders and pawnbrokers from the legislation’s reach.  Not to mention quashing the idea of an independent and stand alone Consumer Financial Protection Agency.  In other words, Corker wanted reform in name only excluding from such regulations all his pet special interests and flipping the bird to the American people.  For a second it looked as if Dodd was going along with it until progressives found out about it and stormed his offices, telephone lines, and email.   He ultimately dropped the negotiations in a statement he made yesterday.  Having said and done all that Sen. Dodd’s statement yesterday is troubling to say the least:

“The proposal that I’ll offer on Monday does reflect a lot of the ideas that Bob Corker and others have brought to the table. It was important to put a proposal on the table, short of a proposal that reflects some broad bipartisan agreement.”

“None of this is a matter of demanding perfection[.]” “The advocates are just demanding some meaningful, sensible, and desperately needed changes and aren’t interested in letting politicians build false confidence and have big press conferences while ignoring the central issues.”

Such comments hint of a watered down, lax, and ineffective proposal instead of REAL financial regulatory reform.. Call Sen. Dodd and demand REAL financial regulatory reform with a standalone and independent Consumer Financial Protection Agency.

U.S. Senator Chris Dodd
448 Russell Building  Washington D.C., 20510
Tel: (202) 224-2823 or email him here

Why is Sen. Chris Dodd, Democrat, allowing  Sen. Bob Corker, Republican,  to run the ship of financial regulatory reform???

• Corker cannot support a standalone Consumer Financial Protection Agency
• Corker unwilling to back mandatory limits on size of banks
• Corker against out-of-court resolution process for banks
• Corker bragging about exempting payday loans from the reform bill by pushing to remove provision that cracks down on payday lenders…a significant contributor to Sen. Corker’s campaign.  You know…the loan sharks who charge low income client as much as 300 percent interest on short term loans.  Did we mention that Corker received a significant amount of his campaign contributions this year from payday lenders?

Seriously Sen. Dodd why are you allowing the banks and payday lender controlled Corker to weaken the financial regulatory reform bill to the point of complete ineffectiveness?  We already know the Republican party is not negotiating in good faith it is simply trying to water down the bill.   What is really crazy is that you are actually considering putting the Consumer Financial Protection Agency under the Federal Reserve?  The Fed controlled consumer protection when the financial crisis happened and protection of the consumer fell by the wayside when it came to the health and safety of the banking industry.  Consumer protection law enforcement toward the banking industry has always been under the jurisdiction of the Federal Reserve and it is REDICULOUS that there is actually a discussion taking place about leaving it there given the circumstances prompting financial regulatory reform in the first place.

Elizabeth Warren, TARP watchdog,  gives a few words of wisdom regarding the Consumer Financial Protection Agency so-called “compromise” currently being discussed in the Senate.  In an recent interview Warren said the following: “[m]y first choice is a strong consumer agency,” the Harvard Law professor and federal bailout watchdog said “[m]y second choice is no agency at all and plenty of blood and teeth left on the floor…….’[m]y 99th choice is some mouthful of mush that doesn’t get the job done,” Warren said.

Warren listed the four things that the Consumer Finance Protection Agency MUST have to be effective:

• A chief appointed by the president, confirmed by the Senate;  
• Independent budget authority, so it won’t be subject to the whims of Congress or an anti-consumer administration;  
• Independent rule-making authority, without interference by bank regulators or others who may focus on bank profitability before focusing on consumers;  
• And independent enforcement powers, so the agency’s investigators can go after abusive lenders. 

“Those are the basic elements of an independent agency,” Warren said. “It’s not as if there’s some fifth thing that was left off that list — that is the list.”  Warren also spoke about the CFPA that was included in the financial regulatory bill passed by the House last December:  “It’s a muscular agency, and that’s what really matters,” Warren said.  ”It’s not perfect — there’s no excuse for excluding used car dealers — but it’s strong,” she said. “The agency that passed the House will get the job done.”

The TARP watchdog believes that it does not matter where the new agency is located but that it has real independence.  Some have disagreed with Warren and argued that housing such an agency in somewhere like the Treasury Department or the Federal Reserve would make a difference in terms of its effectiveness.  We agree.  There is a reason that the bank lobbyists are pushing for a CFPA room rental instead of a house of its own…..proximity matters.

Take a look at the other argument being made by the banks and Sens. Bob Corker (R) and Richard Shelby(R) and a response to it by Rep. Brad Miller (D-NC):

The banks and Dodd’s chief negotiating partners, Sens. Richard Shelby (R-Ala.) and Bob Corker (R-Tenn.) argue that banking regulators must have veto power over consumer protections, because restricting some bank activities could harm the institutions and put at risk their “safety and soundness.”

But Rep. Brad Miller (D-N.C.) wondered aloud how banks could argue that preventing them from ripping off consumers puts them in jeopardy.

“It would be one thing if they were saying, ‘They’re making us do things that will cause us to lose money.’ But they’re saying, ‘If you don’t let us do these things because they’re abusive to consumers, we won’t make enough money to survive,’” Miller said.

“The legislation doesn’t require the banks to offer anything. It would prohibit certain practices. So their argument is, they have to be able to cheat consumers to stay solvent. I’m not sure I’m persuaded by that argument, or that a bank that has to cheat consumers to stay solvent is one we should keep afloat. Maybe it’s time to send in the FDIC.”

Take a look at some other specs:

How do the banks fend off needed reform? Follow the money. A recent report by Paul Blumenthal of the Sunlight Foundation shows that the 27 members of the House Financial Services Committee have received over one-fourth of their contributions from the FIRE (Finance, insurance and real estate sector). Ranking Republican Spencer Baucus from Alabama opposes the CFPA, arguing that we don’t need “more regulation,” we just need “smart regulation.” He received a staggering 71% of his contributions from the finance sector over the first six months of this year (and 45% of his total contributions over his career). Democrat Melissa Bean who leads the effort to gut state regulatory authority over the banks has received fully 42% of her contributions for the first six months from the banking sector. Not surprisingly, the champions of reform like Rep. Alan Grayson, Maxine Waters, Keith Ellison, Adam Putman, and Carolyn McCarthy all pull in the lowest percentage from the sector.

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.

A remorseful John S. Reed, former Chairman and CEO of CitiCorp, appeared before the Senate Banking Committee yesterday as he called for full financial regulatory reform including a dedicated consumer-focused financial protection agency.  ”There seems to have been a key failure that none of us anticipated,” Reed said in a prepared statement at a Senate Banking Committee hearing, “namely, individual institutions which are thought to take steps and exercise judgments to insure their self-preservation turned out ‘not to have’ or been incapable of so doing.

The former Chairman and CEO went further:

In response to a question from Senator Bob Corker (R-Tenn.), who called Reed’s testimony “fascinating” given that he presided over Citigroup at a time when it was expanding in all these areas, Reed said it was exactly that experience that informs his view now.
“I learned a lot,” Reed said, joking that this may be the first time he has ever agreed with former Federal Reserve chairman Paul Volcker on anything. “There’s no question that when we put Travelers and Citi together we created a monster.”

“My honest belief having experienced it…is that the system would be stronger if we could provide for some separation where major depositories are not major actors in the capital markets,” Reed said.

“This clearly means that in designing a robust system, we cannot count on that capacity.”  Mr. Reed decribed what the essential elements of financial regulatory reform must be below.

The capital held by financial firms to protect against potential losses “should be significantly increased, maybe doubled.” He added that he thinks the concept of “risk adjusted capital,” a complex system used by regulators to judge whether a bank has adequate cash, “is flawed.”

The industry should be “compartmentalized” to limit the spread of failures and to preserve “cultural boundaries.”

Traded products (to the extent possible) should flow through exchanges. Much of the derivatives market is currently in the dark, traded over the phone rather than through a centralized exchange where regulators could know what’s going on.  

A consumer-focused financial protection agency with a “clear and separate mandate” should be created.

Are you listening Sen. Dodd???

The consumer cannot invoke the laws of the Consumer Financial Protection Agency through a civil right of action if a credit card company violates the rules????  The consumer must wait for the overworked Attorney Generals and the state’s (probably captured) Banking Commission  to bring a criminal complaint against the credit card company??  Seriously???  Thousands of consumer are protesting at the American Bankers Association in Chicago due to the arbitrary raising of interest rates and continued gouging of the consumer that the banking industry continues to engage in during this period preceding the full enactment of the Credit Cardholders Bill of Rights.  Call your Congressman and tell them that you want the right to sue credit card companies for deceptive or unscrupulous business practices.

Apparently Congress has not been to Chicago lately.  It appears that corporate america has once again captured our legislative branch.  When asked why consumers do not have a private right of action in the bill Rep. Barney Frank responded that the Obama Administration didn’t ask for a private right of action.  A private right of action would definitely keeep the credit card industyry on its toes.  We will do more research on this and let you know the pluses and minuses to a private right of action for the consumer.  It is this writer’s opinion that Congress believes that we are paying so much attention to the health care rebate that we forgot about the huge blunder that put us in this recession in the first place.  So it has decided to try and pass “reform” in the way of a gutted consumer protection agency that has no real power or authority.

Not to mention that fact that according to the bill federal law can preempt stronger state banking laws if it can be shown to seriously interfere with national banking, i.e. not uniform. What???

Major financial institutions have been particularly concerned that the CFPA would create a floor, rather than a ceiling, for financial consumer protection standards, which potentially could subject them to fifty different regulatory schemes.  Representatives Mel Watt (D-NC) and Moore offered an amendment to grant preemptive effect to federal law if a state law would have a discriminatory effect on national banks.

Further, there are too many exemptions for certain industries that result in huge limitations on the CFPA powers.  Take a look at the list below:

1. The first amendment offered, by Representative Joe Donnelly (D-IN), exempted manufacturers of modular homes.
2. Representative Brad Miller’s (D-NC) amendment to exempt banks whose assets under management are less than $10 billion and credit unions whose assets are under $1.5 billion from significant parts of CFPA coverage.
3. Chairman Frank’s amendment to clarify that stores that offer store credit will not fall under the CFPA’s purview;
4. Representative Tom Price’s (R-GA) amendment to exempt employee pension benefit plans;
   Representative John Campbell (D-CA) and Bill Posey’s (R-FL) amendment to exempt automobile dealers, including those that finance automobile purchases by non-retail customers;
5. Representative Dennis Moore (D-KS) and Erik Paulsen’s (R-MN) amendment to exempt forms of insurance, including auto, life, and homeowners;
6. Representative Donnelly’s amendment to exempt manufacturers of modular homes.

CONGRESS we NEED REAL REFORM!

The Consumer Financial Protection Agency moved through the House Financial Services Committee yesterday and will soon be on its way to the House floor.  Though the CFPA is a bit weaker it is still moving.  The Agency will be solely devoted to protection of consumers against the unscrupulous practices of financial institutions.  Republicans fought tooth an nail against passing the Act through the committee.  One of the GOP’s main arguments is that Te Federal Reserve already has the power to protect consumers and they are ready to use it now.  Well despite the fact that the Federal Reserve’s first priority is the health and success of the banks thus creating a huge conflict of interest for the regulatory agency.  But Democrats also argued the following:

“What did the prudential regulators do to protect consumers? Nothing. Zero. Zilch. They didn’t do a thing,” Rep. Luis Gutierrez (D-Ill.) said, noting that the Fed has already had consumer protection powers since 1994 but that they went unused for 12 years. “I think enough has been said here in this committee about the markets. The markets. Always concerned about the markets. Well, you know what? Those markets caused trillions of dollars in losses to men and women who live on Main Street across this country.”

The paying out of huge bonuses in the last couple of days helped to move this along a bit more quickly.  Elizabeth Warren, the person who originated this idea a few years ago, has been a stalwart advocate and has been very instrumental in bringing the CFPA to fruition.

As lawmakers move toward the regulatory overhaul of the financial industry lobbyist have stepped up their efforts.  Millions are being spent to prevent the creation of the Consumer Financial Protection Agency but the American people and Congress must remain vigilant. 

House Financial Services Committee Chairman Barney Frank (D-Mass.) is preparing a new draft of legislation that would set up a Consumer Financial Protection Agency (CFPA) with broad authority to regulate consumer products such as home loans and credit cards.

The U.S. Chamber of Commerce is leading a coalition of 25 lobbying associations against the agency plans. The associations include: the Business Roundtable, Consumer Bankers of America, Financial Services Roundtable and National Association of Homebuilders, among others.

At the same time, a group of 15 law professors sent lawmakers a letter this week backing the new regulatory agency.

The proposal for a new agency has emerged as an early flashpoint in the broader debate over a series of new financial regulations that also include major changes to the regulation of banks and complicated financial derivatives

See remainder of article here.

Elizabeth Warren, the Chair of the Congressional Oversight Panel and the person who originally proposed the idea of the Consumer Financial Protection Agency in the 2007 said the following during a Congressional hearing regarding TARP funds: “People are angry that even if they have paid their bills on time consistently and never missed a payment, their TARP-assisted banks are unilaterally raising their interest rates or slashing their credit lines,” said Warren, who elaborated further about the populist anger over foreclosures and the lack of small business financing.

And in terms of decreasing credit lines the banks are doing just that.  One particularly notable dirty trick the industry is using is slashing credit lines of their customers so that the customer then ends up over their credit limit.  The banks then charge over-limit fees and/or raise the customer’s interest rate even though the consumer is only over his/her credit limit because the bank lowered the customer’s limit after the purchases were made.  Very unscrupulous.  Another trick the industry is trying as a way to increase your promotional interest rate is by attempting to negotiate your payment each month from a higher percentage of your balance to a lower percentage of your balance if you accept a higher interest rate.  Though industry practice prior to the new regulations was three percent, the rule is that banks can charge you between three and five percent of your balance as a monthly payment.  This is a trick on the consumer because there is nothing in place to prevent that same credit card company from coming back to you the following month to negotiate with you to accept and even higher rate in exchange for a lower payment.  Don’t fall for it.  All of these deceptive tactics are being utilized to take full advantage of the non-existent laws before the Credit Cardholders Bill of Rights goes into full effect in February 2010 and because there is no consumer protection agency.  The credit card companies are attempting to gouge consumers by any means necessary which is why consumers need a protection agency whose sole focus is to prevent such practices.   

Some of the reasons cited by Warren as to why it’s vital that we have  Consumer Financial Protection Agency:

• It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street — and the mortgage won’t even carry a disclosure of that fact to the homeowner.
• Consumers would greatly benefit if an independent commission existed to create safe harbors for credit card agreements or ensure that mortgages didn’t keep individuals confused about interest rate hikes.
• It can be proactive rather than reactive.”Three or four years down the line firms will come up with some new idea that they haven’t thought of yet that will have some destabilizing impact on the market,” said a Warren confidant. “Rather than waiting for Congress to come back and take action, you would have a regulatory agency already set up.” 
• Sens. Durbin, Schumer and Kennedy wrote to Treasury Secretary Geitner urging the creation of CFPA because ”we cannot effectively manage systemic risk and restore the confidence of American families in the financial system without making sure that the financial products themselves are safe.”

The Americans for Fairness in Lending has cited the top six reasons for having the Consumer Financial Protection Agency:

• Consumer protection would be the CFPA’s only mission, so consumer interests would not be subordinated to other concerns.
• The CFPA would regulate all companies that are involved in consumer lending, so that companies would not be able to seek out a regulator with looser standards or to avoid regulation entirely.
• The CFPA would impose the same rules on all companies offering the same products, regardless of their charter or corporate form, so all consumers getting the same type of loan would receive the same protections.
• The CFPA would have the authority to both write and enforce rules, thus eliminating the disconnect that can lead to gaps in the current system.
• As the single agency charged with consumer financial protection, the CFPA would have the motivation and the resources to be able to collect the data, carry out the research, and develop the expertise that are needed to regulate effectively.
• With its data, expertise, and unified authority, the CFPA would be able to respond to new abusive practices and products promptly and effectively.

Americans for Financial Reform sums it up:

• A strong federal commitment to robust consumer protection is central to restoring and maintaining a sound economy.  The nation’s financial crisis grew out of the proliferation of inappropriate and unsustainable lending practices that could have and should have been prevented.  That failure harmed millions of American families, undermined the safety and soundness of the lending institutions themselves, and imperiled the economy as a whole.

THE WHITE HOUSE

Office of the Press Secretary
__________________________________________________________________________
For Immediate Release                                               September 14, 2009

REMARKS BY THE PRESIDENT
ON FINANCIAL RESCUE AND REFORM

Federal Hall
New York, New York

11:59 A.M. EDT

THE PRESIDENT:  Thank you very much.  It is wonderful to be back in New York after having just been here last week.  It is a beautiful day and we have some extraordinary guests here in the Hall today.  I just want to mention a few.

First of all from my economic team, somebody who I think has done extraordinary work on behalf of all Americans and has helped to strengthen our financial system immeasurably, Secretary Tim Geithner — please give him a big round of applause.  (Applause.)  Somebody who is continually guiding me and keeping me straight on the numbers, the chair of the Council of Economic Advisers, Christina Romer is here.  (Applause.)  We have an extraordinary economic recovery board and as chairman somebody who knows more about the financial markets and the economy generally than just about anybody in this country, Paul Volcker.  Thank you, Paul.  (Applause.)  The outstanding mayor of the city of New York, Mr. Michael Bloomberg.  (Applause.)  We have Assembly Speaker Sheldon Silver is here, as well; thank you.  (Applause.)

We have a host of members of Congress, but there’s one that I have to single out because he is going to be helping to shape the agenda going forward to make sure that we have one of the strongest, most dynamic, and most innovative financial markets in the world for many years to come, and that’s my good friend, Barney Frank.  (Applause.)  I also want Read the rest of this entry »

The President is giving a speech today on the progress that has been made with respect to overhauling our financial regulatory system.  The credit card and the rest of the financial industry has unleashed its lobbyists on Capitol Hill to the tune of millions of dollars in an effort to thwart the administration’s efforts to overhaul the financial regulatory system.  More specifically preventing the creation of the Consumer Financial Protection Agency is the industry’s highest objective. 

Mr. President we desperately need this agency and cannot afford to continue spreading the responsibility for protecting consumers within the financial markets among ten different agencies that have other much higher priorities.  The agencies currently delegated with this task failed miserably as was demonstrated by the near financial collapse.  Further, and as noted by your chair of the Congressional Oversight Panel, Elizabeth Warren, “[c]onsumer financial products were the front end of the destabilization of the American economic system.”  Obviously all ten regulatory agencies currently charged with consumer protection responsibilities were distracted with other priorities prior to and during the financial meltdown and therefore would not give this aspect of regulatory reform the attention it needs.  We need an agency whose sole mission, purpose, and focus is protecting consumers. In addition, there appears to be a conflict of interest with bank regulators like the Federal Reserve taking on the consumer protection aspect of financial regulatory reform.  A bank regulator’s primary goal is the “safety and soundness” of banks and a bank’s profitability even if its at the expense of exploiting consumers.  Therefore, consumer protection cannot be a high priority at the same time as the profitability and soundness of banks being a priority.  Bank regulating agencies will be less inclined to enforce consumer protection laws if a bank is failing because the regulators main job is to help prevent the bank from failing and the risk of the manipulation or unfair practices perpetrated against the consumer is secondary.  Also, because companies can choose which agency regulates them by how it decides to form as a corporation (e.g. charter, bank, etc.), bank regulators are incentivized to regulate without bite or not be tough on banks because such a reputation will result in banks choosing one of the other nine agencies to regulate it by choosing a different corporate form to operate under.

In short Mr. President, we need the Consumer Financial Protection Agency more than ever because banks have already begun re-engaging in the same irresponsible risk-taking behavior that caused the current recession and the credit card industry is already engaging in deceptive practices as a work around to recently passed consumer protection laws.  As for the financial industry, it is engaging in excessive risk-taking again because no significant changes have been made to the financial regulatory system.  Unfortunately turf-protecting regulators, lobbyists, and Congress have slowed the overhaul process down considerably but we cannot afford to continue at this snail’s pace.  Because banks are again taking risks far greater than the CYA capital they have on hand our financial system is again in jeopardy.  The banking industry continues to operate under the assumption that they are “too big to fail” and that is not healthy for consumers.

Therefore Mr. President, please continue to press hard and fast with regulatory reform including creating the vitally important Consumer Financial Protection Agency.  We will not reiterate the stakes as we are sure that you are very much aware.

Remember the Credit Cardholders Bill of Rights that was passed a few months ago?  Well look for some changes to be implemented by your credit card companies starting today.  The bill mandates the following rules must go into effect today:

• You have a right to reject a rate increase
• You have 5 years to repay your balance at the current rate.  In other words, credit card companies cannot raise the rate on your current balance for five years.
• Companies must provide you 45-day advance notice before a rate increase
• Bills must be mailed 21 days before they are due

The major changes with the most protections under the Credit Cardholders Bill of Rights do not go into effect until February. 

Some of the down sides of the changes is that your credit card company may now start charging you an annual fee to recoup the price gouging profits that it will no longer receive.  In addition, the credit card industry has threatened that it will be harder for consumers to get a card, it will raise interest rates, and risky borrowers may be out of luck. 

Further, the credit card industry has made blocking the creation of the Consumer Financial Protection Agency its “number 1 priority.”  The agency will protect consumers from abusive, deceptive, unfair, and harmful practices by the financial industry.  Throughout this month (August) industry insiders are on the hill and lobbying lawmakers in a major push to prevent the creation of the consumer protection agency.  The credit industry has accumulated millions and millions of dollars to instigate its campaign against increased regulation that it fears will result in a reduction of profits.  Don’t let them get away with it.