In a new effort to guarantee the continued right of banks to loot and pillage, 44 Republican senators have written to Obama saying that they won’t approve of any head of the Consumer Financial Protection Bureau ex what these Ministers of Truth choose to call a “restructuring” of the agency.
The arguments made against the agency strain credulity. As the New York Times reports:
“This is about accountability,” said Senator Richard Shelby of Alabama, the ranking Republican member of the Senate Banking Committee. “The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money.”
Shelby’s blustering is about the CFPB’s budget, which is to be 12% of the Fed’s total. That would make it roughly half the size of the not terribly effective SEC. But Congress controls the SEC’s funding, and there is a direct relationship between what a joke the agency has become and regular threats to cut off its air supply (particularly from the senator from Hedgistan, Joe Lieberman). By contrast, the far more effective FDIC (which has a bigger budget than the SEC) keeps its fees and doesn’t have to go begging to Congress (note the SEC is a profit center and actually uses less money than it collects from the securities industry). Note that the unhappy Republicans are also calling for the CFPB to have a board, as the FDIC does, but that issue is a mere sideshow to the budgetary question.
So Shelby is lying on two fronts: that there are no financial regulators free from Congressional thumbscrews, and that it will have a large amount of money and independence.
And if he really is worried about rich, powerful, rogue financial regulators, why isn’t he taking aim at the Fed first and foremost? It fits his profile far better than the CFPB does.
The real issue, of course, is that an effective CFPB will commit crimes against banking (note that crimes against banking can get you put in jail in Switzerland and they don’t mean just robbing banks. Damaging the reputation of banks also qualifies). Financial firms have behaved so badly in the consumer arena that even a half-hearted effort at consumer protection will inevitably create bad press about banking practices. So it is absolutely necessary to hobble the agency. Warren is not exaggerating when she says:
“Every day, somebody’s got a plan to undercut this agency, to knock it down,” she said. “The conversation is effectively: ‘Oh, we’d really like to kill this thing but it might be too popular for that — that might cause too much blowback. So can we find a way to maim it?’”
Warren has been seen as a non-starter as a head of the agency because she’d never be confirmed. But the requirement that the chief be in place by July 21 necessitates a recess appointment, which would circumvent the approval process. The Republicans are making clear that if that happens, they will extract a few pounds of flesh, say in budget fights.
It was pretty much assumed that the Administration would find someone less inflammatory but still fitting vaguely under the “liberal” brand (particularly now that “liberal” extends well into the center right) to appease the right wing hotheads and still look like they had not completely capitulated. But now that Warren has been doing a good job in staffing up the agency (one of the criticisms made of her was she was a mere academic and hence incapable of running an organization) and various candidates have turned the Administration down, her fans are talking up the idea that she will indeed get the nod.
I’d be delighted for that to be the case, but I don’t see that happening. America is a very big place, and I’m sure if the powers that be look further, they can find someone who will appear adequate. In fact, there might be some logic in holding the “see aren’t you glad this isn’t Warren” candidate back as long as possible to increase Republican anxiety (as in they waste energy shooting at Warren when she isn’t in the running).
Nevertheless, this sorry episode again proves that the primary objective of most members of the ruling classes is preserving and extending their power. Every account of the crisis has shown that bad mortgage lending practices were a major culprit. Having consumers be smarter and better protected should logically be a plus unless your business model depends on cheating them. So the vociferous attacks on the CFPB should clear up any doubts on that front.
is so concerned about an agency whose actions are subject to intervention by the Financial Stability Oversight Counsel as being