5/13/2011 1:35 PM ET|
Banks attack consumer safeguards
The financial industry and its friends in Congress are trying to gut the Consumer Financial Protection Bureau before it even gets off the ground.
Only one thing is powerful enough to beat special-interest money in Congress, and that's public opinion.
Which is why now is a good time for you to speak up.
Banks are maneuvering to gut the nascent Consumer Financial Protection Bureau before it even gets off the ground.
Yes, the same industry that brought you, among other goodies, a) the subprime mortgage crisis, b) any-time, any-reason rate hikes on your credit cards, c) $39 fees for $1 over-limit charges and d) huge bonuses for insiders while the economy imploded wants to be able to keep unleashing such "financial innovations" on an unsuspecting public.
So the banks have set their sights on crippling the bureau. They've gotten their functionaries in the House of Representatives to craft bills that would:
- Give veto power over the bureau to the same regulators that failed to prevent the last crisis.
- Replace the bureau's single director with a five-member commission, to further dilute its decision-making powers and authority.
- Prevent the bureau from even launching until a Senate-confirmed director is in place, effectively holding the bureau hostage to politics.
Bureau held hostage
The banks' representatives in Congress know the majority of lawmakers wouldn't go along with these shenanigans. Even if the bills passed the House, the changes likely wouldn't make it through the Senate.
So they found a way to go around majority rule to hold the bureau hostage. Forty-four Republican senators, including some who originally voted to create the bureau, now say they won't confirm a director unless major changes are made in the bureau's structure, including instituting the multimember commission, allowing other regulators to have veto power and subjecting the bureau's funding to annual congressional review -- the latter being the best way known to humankind to create a weak and easily intimidated agency.
Make no mistake: This is all about power. Banks are terrified of any regulator that might actually force them to play fair with consumers. Proponents of this nonsense are harrumphing that the bureau is "too powerful," when what they mean is that bureau might actually put the interests of regular people ahead of those of Congress' big donors.
Those trying to kill the bureau try to paint it as a killer of jobs and innovation, when in fact its mandate is to protect people from unsafe and deceptive financial products. Rather than craft more regulations, Elizabeth Warren, who is setting up the bureau at President Barack Obama's request, has made it clear that the bureau will enforce those already on the books and prevent banks from hiding tricks and traps in the fine print.
Warren points out the obvious: Banks and other financial companies have replaced free-market capitalism with "gotcha" capitalism, where consumers are lured in by lowball upfront prices only to be slammed with unexpected and poorly disclosed fees.
If you have any doubt that a real regulator is needed, just look at a recent survey showing most banks failed to produce a list of their fees -- even though federal law has required them to maintain and provide such lists since 1991. If you can't even get a bank to tell you what your checking account will cost, how can you trust it to be honest about the loans it offers or the other financial products it's pushing?
At its core, our recent financial crisis stemmed from risky and deceptive lending practices. Our lawmakers have done little to keep another financial crisis from happening, and now the banks' handmaidens are determined to undo the little that Congress has done.
What astonishes me is that more voters aren't calling their lawmakers on the carpet for this flagrant kowtowing to the financial industry. I guess if you were delighted about the bank bailouts, thought those fat bonus checks to bankers were a great idea and don't care if your government is run for the benefit of Wall Street, then it's OK do nothing.
Otherwise, it's time to contact your lawmakers and tell them to stop trying to kill the Consumer Financial Protection Bureau before it even gets off the ground.
You might say something like this: "I want you to represent my interests, not those of Wall Street. Stop the banks' efforts to gut the Consumer Financial Protection Bureau."
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
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Yes, all of you who believe that regulation is just wrong at its core; we should just allow the banking and investment firms to continue undeterred. After all investors lost only a trillion dollars in the last crash because the banking and investment firms are bedding the politicians (or vica versa). That was the second time in the last 10 or so years that investors lost large a percentage of their savings. Why would we want to stop the richest of our "fellow" countrymen/women from making money on our lost money. Not regulating the pigs that continue to operate because people like me and millions more continue to pay our mortgages and other bills each month on the heels of the biggest financial crisis in decades is unconscionable.
If you steal enough money then show that as you were stealing it you were negligent in regulating yourself just give them trillions of bailout dollars and then they can start from the beginning. Yeah that's a good idea.
Mary may forgotten that since the banking industry was deregulated in 1980's more banks have failed since compared to 1929. Wall Street and the banks need to have the regulations put back to protect the consumer.
If you are to big to fail, you are to big to exist, period. Most of these bankers should be in prison and we should NEVER had allowed them to get control of some much of the country's money.
Support the local, small banks and help find a way to put the banking cartels out of business. We really need that Glass Steagal act, NOW!!!!!!!
Is anyone shocked?
Then, of course, when the next crisis occurs, we'll blame the lack of regulation again, and come to the conclusion less regulation is needed, because the regulation agencies didn't do their jobs.
We've already seen what happens when the agencies that oversee a business looks out for business instead of the countries greater financial well-being. Of course, coorporations donate billions, and we don't, so in Congress, business wins.
I'm thinking it's time we all got up off our "kiesters", and start letting these banks, wall street, etc., know that we are tired of their BS!! They are doing nothing but getting us down, and trying to keep us down! It is time to stop their POWER GRAB, and the "swindeling of the American People"!!
Get on the phones, email, and yes even postal mail, and let your representitives, congressmen, and senators KNOW HOW YOU FEEL!! If they don't do their job, FIRE THEM!!
I don't like how the whole industry is painted bad w/ just one brushstroke. It is the megabanks fighting this. Small, community banks have no problem. The one-size-fits-all regulations Congress passes can cripple small, community banks because of the cost and people resources need to comply.
This forces them to eventually take buyout offers fro the megabanks, which makes them even larger, and decreases competition, and the next time they needed bailed out, the cost will be even greater. (And there WILL be a next time.)
Buy local isn't just about produce...its about banks too!
It's nice to see Liz writing about bigger issues then balancing a check book.
I happen to agree with her here. I'm not a fan of regulation, but one central authority with 'real' power needs to be in place to hammer the banking industry. Frankly banks with their ability to issue debt, and the monopoly power of the quasi-private FED and legal tender should be turned into public utilities for all intents and purposes. They are simply too dangerous to let function solo with that much power. This goes triple for the Mega Banks, which should be broken up into small bits and bobs already. A set of standardized rules will go a long way to putting everyone on the same playing field.
The worst thing about this is how the Republicans are going about 'limiting' this new agency. The party of 'small government' is just creating more bureaucracy to dilute and hamper this agency. If they don't like it just 'repeal' the agency, that would be the logical and principled thing for limited government Republicans to do. But there is one problem, the public LOVES the idea of banks getting read the riot act by a central authority. It also gives citizens something they have never really had in the entire history of banking in this country. A central place of redress for their grievances.
If you buy into the Republican Party message...either because you truly believe in pre-Revolutionary French trickle-down economics or because you like Republican family values and gun nut rhetoric...then you fully support this deregulation and predatory "state of nature" style business practices. G.W. Bush was great for banks...just think about his 2005 bankruptcy laws. Debtor prisons will return soon....get ready for grandpa to be thrown in a prison work-farm for seven years (until he is able to pay for that little surgery he had to have last year).
Never got a job from a poor person.
You work for a coorporation? Who do you think actually owns the company? Thats right, the individual shareholder, or normal joes. Small Business? I highly doubt its owner qualifies as "rich" by most standards.
Thiis is how you get into the logical fallcy of "rich people create jobs". No, consumers create jobs, and consumers without money equals a crashed economy.
It passed rules and regulations that everyone took advantage of and the government failed miserably in it's function to oversee the system, as it usually does
And people like me complained when regulations were overturned, and complained louder with the orders to not regulate during the Bush years.
Hence, people like you complain when regulations are overturned and not enforeced by one party, then complain about new regulations and enforcement by the other. In that case, yes, Congress is always at fault.
This forces them to eventually take buyout offers fro the megabanks, which makes them even larger, and decreases competition, and the next time they needed bailed out, the cost will be even greater. (And there WILL be a next time.)Hence why people like me wanted them broken up, or at least let Congress have the power to break them up. The fact that wasn't included in new regulations does indeed mean there will be a next time, as the search for more profit will eventually break the risk/reward system yet again.
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