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Sunday, May 29, 2011


If you don’t understand how Republicans in Congress use stealth tactics to attack what they don’t like and what does not benefit their benefactors, you are in for a long, hard ride to the bottom of the barrel.

Wouldn’t it be great if we had a strong, independent consumer protection agency that would have the tools to detect and rein in the tricks, deceits and traps of the financial industry, like the fine print in their contracts?  Wouldn’t it be terrific to have a financial regulator in Washington D.C. watching out for families instead of banks?

Guess what?  We already have it, and it’s called the Consumer Financial Protection Bureau (C.F.P.B.) created by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  It is not as independent as one might like, but it does have potential to rein in the financial industry.

Fearful of its potential, Republicans (and some Democrats) in Congress made sure that it was not an entirely independent agency (its housed in the Treasury Department), that its rules are subject to appeal, its budget is capped by law, it is subject to Government Accountability Office oversight, and its executive officer must report annually to Congress. 

Even with those restrictions, three financial industry-courting Republicans are launching a sneak attack on the agency by targeting the very competent candidate to lead the agency, Elizabeth Warren (also attacked today by Sen. Mitch McConnell on Meet The Press).  First, they introduced three bills that would limit the agency’s potential: one, by replacing a single director with a five-member commission (guaranteed to obstruct rule-making); second, by lowering the number of votes that would be required to overturn a C.F.P.B. rule; third, by requiring Senate confirmation of the agency director.  These bills are intended to weaken the agency from its start, and to make it much harder to do its work.

Moreover, these bills have made it possible for the Republicans on the Financial Services Committee in the House to call the intended director before their Committee (when they hold hearings on any of the bills) and to harass her.  One House committee-watcher has said, “I cannot recall one witness treated so badly by so many.  Republicans on the Committee  are out to gut the consumer protection agency and to kneecap Warren.”

Why are the Republicans and Tea Partiers fighting so hard against this agency and its intended director?  Simple.  Consumer protection that is now scattered across at least 12 different federal agencies will be brought together in a quasi-independent Bureau that can regulate mortgage brokers, mortgage lenders and servicers, payday lenders, credit card companies, private student loan providers, and all banks with assets over $10 billion.  Mainly Republican campaign donors, patrons, and supporters are the heads of such financial institutions, so Congressional Republicans are under pressure to do something to stop this agency in its tracks.  Republicans in Congress are scared to death of the potential power of this agency and its director, not only because of its regulatory power, but because it draws its funding directly from the Federal Reserve, and only needs to go to Congress if additional funds are required.

President Obama needs to use a little stealth of his own and make a recess appointment of Ms. Warren to head the agency, and to get it underway.  Republicans may not like the idea of this agency, but consumers like us are going to love it!