CFPB

What Those NLRB And CFPB Recess Appointments Mean To You

Dave Johnson — Fri, 02 Mar 2012 15:23:29 -0500

In January the President sidestepped Republican obstruction and made "recess appointments" to the Consumer Financial Protection Bureau (CFPB) the National Labor Relations Board (NLRB). This was because Senate Republicans were blocking all nominations, in order to keep these agencies from operating. Now that they are operating we can all see what it was Republicans were trying to prevent.

One example: In New York, a company named Renaissance Equity Holdings owns Flatbush Gardens, a 59-building, 2,500-unit complex. They have "locked out" 70 or so employees for refusing to take a 30% pay cut and for taking them to the NLRB for unfair bargaining. Renaissance was depending on the NLRB being unable to do anything about this thanks to the Republican effort to keep the agency from operating. So now is trying to keep the NLRB from enforcing the rules by contesting Obama's recess appointments. Bloomberg: Obama Labor Board Recess Appointments Challenged in New York Lockout Trial,

The Flatbush porters and handymen, many of whom filled the courtroom gallery today, were frozen out of their jobs in November 2010 after they refused to accept an at least 30 percent pay cut. The Service Employees International Union Local 32BJ is seeking to have them returned to work at the higher wages they were making while the dispute is resolved.

The labor board filed the court case on Jan. 25 saying there was “reasonable cause to believe” that Renaissance engaged in unfair labor practices and the lockout should end.

The union said in court papers that Renaissance is trying to eliminate organized workers from the complex.

CFPB To Regulate Debt Collectors

The Consumer Financial Protection Bureau is going to regulate debt collectors. For more on this here is US News:CFPB Takes Aim at Debt Collectors, Credit Reporting Agencies,

"These are [firms] involved in the financial system who have not been traditionally regulated," says Ira Rheingold, executive director of the National Association of Consumer Advocates, adding that while the Federal Trade Commission has historically handled regulating debt collectors and credit reporting agencies, it has had limited reach.

... The details of the new oversight are still murky, but it could allow the CFPB to go into theses business and examine their books and evaluate their practices. "They could do a compliance review, which was never really done before," Rheingold says.

It could also mean the CFPB has the authority to set rules governing the practices of the industry. "It's a very important announcement and something that we've needed for a very long time but didn't really have because the FTC was hamstrung," Rheingold says. "They didn't have quite the same authority as the CFPB has."

Why is this so important to regular people? Matt Stoller, writing at Naked Capitalism, explains, in One in Seven Americans Pursued by Debt Collectors,

...Ten years ago, one in fourteen American consumers were pursued by debt collectors. Today it’s one in seven.

The experience of debt collection can be chilling, as this 2007 ABC News report suggests.

Consumers around the country have taped threatening phone calls from collectors who have called in the middle of the night, used abusive language and have threatened to have people fired from work or thrown in jail. All of these tactics are illegal under federal law.

... There are now thousands of people legally jailed because they aren’t paying their bills, ie. debtor’s prisons have returned. Occasionally elites let it slip that this is not an accident, but is their goal – former Comptroller General David Walker has wistfully pined for debtor’s prisons overtly (on CNBC, no less).

... This is part of the new social contract. The sheer percentage of consumers with third party collections in pursuit is striking. Additionally, the uptrend through both Bush boom and Obama bust years of the percentage of people being tracked down by third party collection agencies suggests we live in a different country than we did just ten years ago.

By having a functioning CFPB maybe we can start to get these credit bureaus under control, helping people instead of helping prey on people.

So these agencies are operating, starting to do their jobs, protecting regular, working people. The big companies, union-busters, scammers and other 1%ers are screaming over how unfair this is.

Labor, Consumer Agency Fights Aren't Over: Now Republicans Try To Defund Them

Dave Johnson — Thu, 19 Jan 2012 14:39:44 -0500

Republicans were blocking National Labor Relations Board and Consumer Financial Protection Bureau nominees to keep these agencies from doing their jobs under the law, in exchange for a cut of the take. Obama made recess appointments to get them up and operating. Now Republicans are trying to defund the agencies.

NLRB and CFPB Protect Public And Legitimate Businesses

The National Labor Relations Board (NLRB) and the Consumer Financial Protection Bureau (CFPB) are two essential agencies of our government for protecting the interests of the middle class and their smaller businesses (99%) from assaults by the wealthy and powerful and their giant corporate fronts (1%). But these agencies were being hampered in their efforts to do their jobs under the law, with Republicans using the filibuster to block confirmation of nominees. The NLRB is not allowed to issue rulings without a quorum of Board members, and the new CFPB was not able to get completely up and running without a confirmed director. So President Obama made recess appointments to get these agencies up to their legally-mandated levels.

Scams, Schemes and Swindles

Keep in mind what these agencies do for We, the People.

The CFPB protects the public from scams, frauds, cons, schemes, tricks and other swindles that shady, smarmy boiler-room and other bogus operators come up with, to fool people out of their money. Without a government watchdog these outfits can run a good con, generating plenty of cash to pay off politicians to keep the CFPB watchdog off their backs.

The NLRB protects working people and legitimate businesses from abusive, rulebreakers who game the employment system to exploit American workers, to gain advantage over honest businesses that want to play by the rules. When a shady business can lower their operating costs by exploiting working people, legitimate businesses that want to play by the rules and do right by others are put in a competitive bind. So these shady businesses use some of the take to pay off politicians to keep the NLRB sheriff off their backs.

Paid-Off Politicians Block Enforcement

Now that the President has gotten these agencies up and running, protecting people and legitimate businesses from these shady operators, the scammers are paying off politicians to try to shut these agencies back down.

Republicans are responding by attempting to block funding to keep these agencies operating. They are doing so in exchange for a cut of the profits this generates for companies that operate in ways these agencies are supposed to regulate. The Hill has the story: GOP looks to limit CFPB, NLRB powers in reaction to ‘recess’ appointments,

Rep. Jeff Landry (La.) and 20 other House Republicans introduced legislation this week that would limit the authority of the Consumer Financial Protection Bureau (CFPB) and the National Labor Relations Board (NLRB) to operate as long as they are headed by appointees who were recess-appointed while the Senate was not in recess.

Don't let the Republicans get away with this. The NLRB and CFPB protect We, the People, the 99%, from exploitation by the wealthy and powerful 1%.

Obama’s Recess Appointments: It’s Called Governing

Dave Johnson — Thu, 05 Jan 2012 14:36:03 -0500

After years of conciliation and one-way "bipartisanship," with Republicans refusing to meet even partway, the President got fed up. The President is finally taking the necessary steps to get the government up and running, doing government's job of protecting citizens from the exploitation by the wealthy and powerful. Republicans say the President taking executive action to keep the government operating is "unprecedented" and a "power grab." Let's take a look at what Republicans have been doing to trigger this action.

Filibusters

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Tell President Obama, "I've got your back." Support his decision to buck Republican obstruction and make recess appointments to the Consumer Financial Protection Bureau and National Labor Relations Board.

Since the President took office Republicans have used the filibuster an unprecedented number of times. Ezra Klein, in Government by loophole, explains that this was "more filibusters between 2009 and 2011 than there were in the 1950s, 1960s and 1970s combined."

The corporate media likes to say that "it takes 60 votes to pass a bill in the Senate." That is just incorrect. It takes 51 votes to pass a bill in the Senate. It takes 60 votes to break an obstructionist filibuster. It's just that the Republicans are filibustering everything now - and the media hasn't been letting the public know.

Blocking Nominations

Republicans have been blocking confirmation of the President's nominees to government agencies, the courts, even keeping ambassadors from being confirmed. They are not objecting to the nominees themselves, they are trying to keep the government from operating as it is supposed to. Klein calls all of this this "loophole-driven minority obstruction." People are calling this "nullification." "Nullification" was the pre-Civil War "states rights" practice of Southern states simply ignoring federal laws. The Republicans are again engaging in nullification, on behalf of the 1%.

In particular, Republicans were blocking nominations to the new Consumer Financial Protection Bureau (CFPB) and the National Labor Relations Board (NLRB) in order to prevent these agencies from doing their job enforcing laws protecting people from scams and exploitation in exchange for a cut of the take from the scams and exploitation.

Republicans have also been obstructing an unprecedented number of judicial nominations, with 15 appellate court and 67 trail court vacancies unfilled. Even long-time conservative movement operative Chief Justice John Roberts has complained that this lack of confirmation of judicial nominees is hurting the court system.

CFPB

The CFPB is a new agency whose mission by law is to protect people from scams and con games designed to trick and cheat them. The Republicans were obstructing the nomination of Richard Cordray in order to block that agency from getting set up and operating. They said so. They were doing this because the people who make their living cheating people were giving them a cut of the take in the form of campaign cash, support for conservative movement organizations and information outlets, and the promise of lucrative jobs after the leave government.

The NLRB

The NLRB protects workers from exploitation. Republicans have been keeping the agency from operating, so they can continue to engage in illegal practices to break unions, fire organizers and other tactics to break the middle class and enrich the 1%. They were doing this because the people who increase their profits by exploiting workers were giving them a cut of the take in the form of campaign cash, support for conservative movement organizations and information outlets, and the promise of lucrative jobs after the leave government.

Shutting Down Government And Agencies

Republicans have repeatedly held agencies of government and even the entire federal government itself hostage to extremist demands. In some cased they have even forced shutdowns to get their way. For example, the Federal Aviation Administration (FAA) was shut down last year by Republicans to help a company, Delta Airlines, in its union-busting efforts. This caused the layoff of almost 100,000 government employees and construction contractors, and cost the government more than $200 million.

Destroying Country's Credit Rating

We are all-too-familiar with the debt-ceiling hostage-taking debacle. After Republicans threatened to destroy the economy by letting the country default on its debts Standard & Poor's downgraded the country's credit rating, saying any debtor that threatens to default rather than pay its debts does not deserve the top rating.

President Takes Action

The President has a legal mandate to keep the government running. He has the responsibility to do what needs to be done to get around this kind of obstruction. He took action to get the government and its agencies operating. He has the authority and the mandate to do this under the Constitution.

Responsibility To Govern

The President has a responsibility to govern, especially in the face of this unprecedented obstruction. He has a mandate under the law to keep the obstruction from getting in the way of government doing its job, protecting citizens and enforcing laws and regulations.

Unprecedented?

U.S. Chamber of Commerce President Tom Donohue, promising to fight the appointments in court, said the President's action is "unprecedented, constitutionally questionable, and puts the authority of the director and the validity of the bureau's work in legal jeopardy."

Sen. Mitch McConnell said the President "has arrogantly circumvented the American people."

The chart says all that needs to be said about the Republican hissy fit over Obama's "unprecedented" recess appointments.

President Sidesteps GOP Obstruction With Consumer And Workers' Rights Appointments!

Dave Johnson — Wed, 04 Jan 2012 16:01:22 -0500

President Obama moved an obstructing GOP out of the way earlier today, announcing that he was making a recess appointment to get the Consumer Financial Protection Bureau (CFPB) up and running. Later, the White House announced he is doing the same to get the National Labor Relations Board (NLRB) up and running again as well.

TAKE ACTION

Wall Street-backed Republicans are going to scream and squeal and throw the usual hissy fit. You should just ignore them and thank President Obama for taking the right action to protect us as workers and as consumers. Here's why.

CFPB: Protecting Americans From Wall Street Scams, Schemes And Swindles

President Obama has made a recess appointment of Richard Cordray to the CFPB -- "America’s consumer watchdog." This means that the new agency can get going on its mission to protect citizens from Wall Street scams, schemes and swindles.

Until now Republicans had vowed to block any nominee from heading up the agency in order to keep the new agency from getting up and running. They didn't object to the qualifications of the nominee, they objected to the job that the agency is supposed to do under the law, namely protect American citizens from the various scams, schemes and swindles that Wall Street comes up with to defraud unsuspecting consumers.

Making this appointment, the President said,

The only reason Republicans in the Senate have blocked Richard is because they don’t agree with the law setting up the consumer watchdog. They want to weaken it. Well that makes no sense at all. Does anyone think the reason we got in such a financial mess was because of too much oversight? Of course not. We shouldn’t be weakening oversight and accountability. We should be strengthening it – especially when it comes to looking out for families like yours. Financial firms have armies of lobbyists in Washington looking out for their interests. It’s time someone fought for you, too.

He also said he is "obligated" to do this,

"When Congress refuses to act and as a result hurts our economy and puts people at risk, I have an obligation as president to do what I can without them," Obama said "I have an obligation to act on behalf of the American people."

The same logic holds true for the NLRB, an agency trying to do its job protecting working people from exploitation by huge, wealthy, powerful multinational companies.

NLRB - Protecting Workers From Big-Company Exploitation

Republicans have also been obstructing the NLRB from operating by refusing to confirm nominees -- any nominees, regardless of qualification. Just as with the CFPB, they don't object to the nominees, they object to the mission of the NLRB under the law.

As a result of this objection the NLRB was effectively shut down as of the first of the year, unable to do its job protecting American workers from exploitation.

The mission of the NLRB, by law, is "to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy." Republicans object to the purpose of the law itself, so they are obstructing its enforcement.

In a statement this afternoon President Obama announced he was appointing to the NLRB Sharon Block, the Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor; Terence F. Flynn, currently detailed to serve as Chief Counsel to NLRB Board Member Brian Hayes; and a former counsel in the Labor and Employment Group of Crowell & Moring LLP; and Richard Griffin, the General Counsel for the International Union of Operating Engineers.

Republicans Scream And Squeal: It's What They Do

Republicans are going to throw their usual hissy fit -- it's what they do. So while they're doing that, let's look at the facts about recess appointments. From Mother Jones, Chart of The Day: Presidential Recess Appointments:

The chart says all that needs to be said about the Republican hissy fit over Obama's recess appointments.

Mr. President, we have your back. We support you for making recess appointments to get the CFPB and NLRB up and running again! Good job!

If you agree, click this link and let President Obama know.

Is Enforcement Bad For Business, Mr. Banker? Boehner's Boys'll Fix That For Ya, Permanent-Like

Richard Eskow — Fri, 22 Jul 2011 15:23:22 -0400

Psst! Hey, you! Yeah, you, in the expensive suit. Listen, Mr. Banker, are you worried that a little oversight and enforcement might be bad for business? I hear ya. I really do. But listen ... hey, come a little closer, pal. I won't bite ya! I got an offer and I don't want to shout it.

What you need is somebody who can fix this problem for ya. Permanent-like, if you catch my drift. And I think you do. You don't have to get your hands dirty, neither. I know a guy who knows a guy ... in fact, he knows a lot of guys.

Here's his number. He'll handle it real discreet-like. I know, I know. You don't want your name drawn into this. You like giving those interviews where you play the wise statesman and complain that people aren't nice enough to folks like you.

No, no, that's not how you say it! It's spelled B-O-E-H-N-E-R, but it's pronounced "Bay-ner." He'll be waiting for ya on K Street. Can't miss him: Orange tan. Cries a lot. Likeable as all get-out. Even the Big Guy says he can "do business with him."

Don't worry, pal. Johnny'll get the heat off your back before ya even know it. I know the right folks. We got that Warren lady outta the way this week, right? Now as for that little "bureau" of hers - well, stuff happens, right? There could be a fire, maybe, or an accident. Or maybe some kinda new law, I dunno. Johnny'll think of something.

Say hello for me when you see him - and don't forget to bring your wallet.

________________________________

Yesterday the House passed H.R. 1315, and the normally humor-challenged Republicans showed unusual wit by naming it the "Consumer Financial Protection Safety and Soundness Improvement Act of 2011." That's like naming the German U-boat flotilla the "Improved Safety and Soundness Fleet for Ocean Travel of 1941."  The bill actually weakens our economy's safety and soundness, even as it helps banks prey on consumers. U-boats were designed to sink ships, and this bill was designed to torpedo consumer protection.

Democrats originally proposed a Consumer Financial Protection Agency, but Republicans dug in their heels and demanded that it be downgraded from a stand-alone agency to a bureau, housed within the notoriously bank-friendly Federal Reserve. How bank-friendly? As the GAO reported this week, Fed officials gave $16 trillion in secret loans to American and foreign banks and was rife with conflicts of interest. Fed executive William Dudley was allowed to keep personal holdings in AIG and GE Capital as his institution was bailing them out. JPMorgan Chase Jamie Dimon - who seems to spend every other hour complaining that people say mean things about bankers - was on the board of the New York Fed while the Fed was giving his bank $390 billion in financial assistance.

So Republicans won a huge victory by downgrading the CFPB and housing it within the Fed. (That deal was worked out with Sen. Shelby, who voted against Dodd/Frank anyway.) They won another huge victory when they put its rulemaking authority under the supervision of a council comprised of heads of other agencies, many of whom have also been subservient to the big banks.

But the Bureau is still capable of doing some very good things, and that's what this bill is designed to stop. Under current law, the oversight council can only reject a CFPB regulation if a tw-thirds majority concludes that it threatens the safety and soundness of the U.S. financial system. This law would allow the council to veto a CFPB regulation with only majority, if that regulation "is inconsistent with the safe and sound operations of U.S. financial institutions. "

"Financial system" means the entire banking economy - that is, the economy itself. "Financial institutions" means "the banks." So they're not just removing the requirement for a two-thirds majority. They're saying that the council must veto a regulation if it threatens the "sound operations" of a bank - that is, if it's bad for business.

Presumably this rule means that regulators could not have stepped in to prevent the savings and loan scandal of the 1980's, because preventing their destructive crime wave would have led to their bankruptcy. (Which came later, along with a wave of prosecutions that contrasts sharply with their absence this time around.) The spirit of Charles Keating is alive and well and walking the halls of Congress. In fact, his "Keating Five" now numbers in the hundreds. And now, as then, it includes members of both parties - that is, it includes some Democrats and virtually all Republicans.)

That's not all that this bill does. It would also eliminate the office of Bureau Director and replace it with a five-person committee. Why? Because organizations are much more effective when there's a single leader, and because that leader would become a spokesperson for the American consumer.

And that could be bad for business.

It's a brilliant way to subvert the agency, when you think of it. How did they think of it? Picture the scene: Republican politicians and bank lobbyists are sitting around a table in some Georgetown penthouse, having a few beers and kicking ideas around while a TV plays in the background. "How?" they ask themselves. "How can we paralyze this bureau?"

Suddenly the last scene from Reservoir Dogs comes onto the television, the one in the warehouse where the gang members argue, points their guns at one another, and then start blasting until everybody's dead. One of the Republicans drops his drink, stands up so quickly that the lobbyist on his knee falls to the floor, and shouts at the others: "I've got it!"

The Republicans explained that the ruling committee would be bipartisan (because, you know, that whole "bipartisan" thing has worked out so well for ordinary people so far). That can lead to only two possible outcomes: that it will be hopelessly deadlocked, or that bank-friendly Republicans and bank-friendly Democrats will team up to ensure that Wall Street's interests are well protected.

Of course, perhaps the Republicans really believe that committees are more effective than executives. I'll believe that when every Republican governor in the country turns their executive responsibilities over to a five-person committee. Until then we'll have to presume that their objective is to mire the CFPB in confusion, gridlock, and confusion. This act of subversion runs against public opinion,which is heavily in favor of the Bureau. But they're counting on Wall Street's fat campaign contributions to buy the ads that will insulate them form any blowback at the polls.

The bill passed yesterday, on the one-year anniversary of Dodd/Frank's passage. It turns out that the House Republicans don't just have a droll sense of humor. They're sentimental, too.
________________________________

Psst! Mr. Banker! I'm over here, in the shadows.

Didn't I tell ya Johnny would come through for ya? Yeah, he sure did. Glad you feel that way. If you're happy, I'm happy. What's that? You wanna make sure you keep paying these super-low taxes we fixed up for ya? No sweat. Johnny's boys can fix that for ya, too, if you don't mind hurting a few old people. But we'll have to bring a few more folks in on the operation.

Thanks for the envelope. There's a bonus, too? Thanks! It's a pleasure doin' business with ya, pal, a real pleasure.

Like always.

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Elizabeth Warren's Choice: Politics or Independence

Richard Eskow — Mon, 18 Jul 2011 15:12:02 -0400

Elizabeth Warren's well-heeled opponents have behaved ... well, like heels. The Washington/Wall Street axis prevented her from becoming the first director of the Consumer Financial Protection Bureau, but they may regret it someday. Washington has lost the best person for the job, but hopefully the country has gained an independent voice for real financial reform.

She clearly was the best choice. As a forceful and articulate advocate for consumers, Warren was best positioned to give it clout and meaning. The CFPB was her brain child, and the country owes her a debt of thanks for shepherding it this far. Her non-appointment is a loss for the public and a win for the banks.

But she can thank her opponents for a newfound freedom to speak candidly. Among her other laudable qualities, she's clearly a good soldier. That's presumably why she hasn't spoken up on topics like the lack of bank prosecutions, or the proposed mortgage settlement that would let banks escape their financial and moral responsibilities yet again. Hopefully she'll use her newly-won independence and her increased visibility to resume her role as an independent voice for reform, and as a critic of unnecessary compromise wherever it appears.

The Anti-Warren Movement

We're told that Professor Warren had opponents inside the Administration and among right-leaning Democrats on the Hill, as well as among the bought-and-paid-for Republicans. Now she's free to become a leading voice for an independent bank reform movement. And that's exactly what's needed. Our financial system remains hopelessly broken and corrupt. As a result, our political process is also broken, too. Wall Street money has been used to water down much-needed reforms, delay their implementation, impede legal investigations, and prevent the additional reforms needed to protect the country - and the global economy - from a new class of financial super-predator.

Republicans made it clear that they would never confirm Warren. She scares both the politicians and the bank masters who finance them - and she should. They made their opposition clear when they used one hearing after another to treat her with extraordinary crudity and hostility -- a mood only lightened by the interjection of economic statements so cartoonish and loony that she showed extraordinary restraint simply by keeping a straight face.

(We showed the video and discussed their behavior on The Young Turks. If you're depressed about this, watch the video. Her facial expressions alone will cheer you up.)

Elizabeth Warren 2.0

Their lynch mob behavior toward one of our generation's leading reformers had one saving grace: It put the Republicans' fawning servitude to Wall Street lobbyists on display for the entire nation to see. But what's next for Warren?

There's a lot of talk that she may run for Scott Brown's Senate seat in 2012, and that seems like a real possibility. But sometimes our best role is chosen for us by events and circumstances. They've already conspired to give Warren the role of public champion against the power and corruption of the big banks. And she's earned it.

It's her life, or course, but one way to weigh every opportunity is by asking if it's the best way to serve that mission. She hasn't asked our advice, but here are a few other things she may want to consider as she designs Elizabeth Warren 2.0.

Bank reform really is - or should be - a nonpartisan issue.

Financial reform shouldn't be a partisan issue. Pro-business conservatives should recognize that banks are seizing an unhealthy share of the nation's profits (which has once again reached the 40% range), restricting lending while fattening themselves off low-cost Federal Reserve money, and making it difficult for entrepreneurs and growing companies to earn their fair share of the country's income. Banks are occupying our economy like an invasion force, skimming off the cream and leaving only the dregs for the small and medium-sized businesses that are the lifeblood of a truly free-market economy.

And everyone, Republican or Democrat, is a bank customer. That means that everyone has been frustrated or misled by banks. And lest the politicians forget, the Tea Party movement was born in large part out of frustration and anger at the big banks.

Would Professor Warren have more clout as an independent voice for change? We can't know yet, but that's a possibility worth exploring.

A new "Warren Commission"?

A successful Senate run would give consumers another badly-needed voice in Washington, and the Senate could be a platform for pursuing more investigations into bank fraud and misbehavior. But that will be harder if the Democrats lose their Senate majority.

Sen. Elizabeth Warren could lead hearings into bank behavior. But first she'd have to win, which is by no means a given in this political climate. And then she'd have to get the right committee appointments, persuade her colleagues to support an investigation, etc. etc. (Politics is the art of the "etc. etc.")

She could conduct investigations outside the Senate, too, if the right venue were found. We've already had one "Warren Commission," but we need another It could be charged with identifying bank corruption - root, stem, and branch - and laying out its influence on politics, law enforcement, media, and all aspects of American life.

Who better to lead such a Commission than Elizabeth Warren?

Warren as Democrat

Warren's appointment, or that of her senior deputy Raj Date, wasn't a fight the President wanted to fight. But by appointing Richard Cordray, President Obama selected a strong advocate for consumers. The obstructionist Republicans in the Senate have already indicated that they'll oppose any nominee, no matter how right-wing, unless the bureau is weakened to the point of ineffectiveness.

So any temptation to fault the President for failing to choose Warren should be tempered by the fact that he could have gone much further right. If GOP Senators had rejected a fellow Republican, for example, the White House could have made even more political hay out of their vote than it's likely to do if (as seems probable) Cordray is also rejected. Perhaps Warren the proto-Democrat has already won a concession.

Does that mean the Democratic Party is her natural home? Maybe. But if she runs for a Democratic seat she'll be called upon to pull her punches on some critical financial battles, if only to protect the party's lifeline to corporate contributions. Can she resist that temptation forcefully enough to keep fighting for meaningful change? That's something to consider.

An independent reform movement

We need an independent movement for financial reform. We can't look to politicians to fix Wall Street. Bankers' money is too tempting for any politician or party to resist, especially in this post-Citizens United world. This systemic corruption can only be stopped by an independent citizens' movement that's beholden to no party or individual.

Whatever she chooses to do, Elizabeth Warren will be an asset to that movement. If she passes on the politician's life she'd be ideally suited to galvanizing it. If she runs and winds she'd be a great voice for reform in the Senate. But that would mean staying as independent as possible, which isn't easy for a Senator.

Whatever she does, we hope that Prof. Warren will continue to make independent and imaginative thinking about financial reform a core part of her life's work. If she does, today's loss could be tomorrow's gain.

Hill's GOP Pack Nips At Elizabeth Warren's Heels Again [video clip & commentary]

Richard Eskow — Fri, 15 Jul 2011 19:50:12 -0400

While hosting The Young Turks this week we covered the latest interrogation of Elizabeth Warren by House Republicans, who are determined to make sure that she -- and the bureau charged with protecting consumer from bank ripoffs - are discredited.

The headline for this piece should be "Elizabeth Warren Listens to Ludicrous Republican StatementsWhile Maintaining Straight Face." It was really impressive of her to maintain her composure as long as she did, and we couldn't help picturing a thought balloon above her head as she half-suppressed a smile.

Here's the video of her Capitol Hill appearance, along with our introduction and commentary:

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The Economic Security President: Four Ways To Be "Bold" and "Gutsy" On the Home Front

Richard Eskow — Mon, 09 May 2011 18:23:05 -0400

The post-bin Laden afterglow is fading. Those video clips of his home movies seem like scenes from a reality show, not glimpses of an Existential Threat. It's the master terrorist as an addled Ozzy Osbourne, minus the Beverly Hills couturiers and groomers. And while a few people might wait for bin Laden to sing Ozzy's "Iron Man" -- "Nobody wants him/he just stares at the world, planning his vengeance" -- our attention-deficit nation is getting ready to move on.

Significantly, while the President's overall approval rating jumped 11 percent after the killing, his economic approval fell and reached a new low: Only 34 percent approved of his handling of the economy, while 55 percent disapproved.

People were happy to see 9/11 avenged, but there's another lesson in that 11% boost, too: The public wants its President to be clear-eyed, resolute, and able to make tough decisions under pressure. We know now that the President can be (and just as importantly, can appear to be) as steely-eyed and decisive as the best of them.

They can't kill Bin Laden again. Al Zawahiri's a distant number two, and after that the terrorists' names are so little-known that our national game of Call of Duty: Black Ops will quickly descend into Trivial Pursuit. So what's next? Hmmm: Steely-eyed. Calm under pressure. Making the tough calls ... wonder where else those Presidential skills might come in handy?

Here are four "bold" and "gutsy" moves the President can make right here at home that would be good for the country ... and good for him:

1. Nominate Elizabeth Warren as a recess appointment to the Consumer Financial Protection Bureau.

The GOP handed this one to him when 44 Republican Senators signed a letter saying that they "will not support the consideration of any nominee, regardless of party affiliation," unless the Agency is watered down and restructured even more than it has been.

Now is the time to say "Look, guys: I'll negotiate whenever it's reasonable and fair. But we had a debate when we created this agency. We took some of your suggestions into consideration and then we had a vote. You lost. You can't re-legislate every law that's ever been passed by holding an agency hostage -- especially one that's designed to protect the public."

Now that's decisive and tough -- two things that Elizabeth Warren will be adding to the President's team in spades. They say she's bumped heads with senior White House officials. But strong leaders know that a little conflict can make a team stronger.

The President can also say: "What's next - ending Medicare by refusing to confirm a Secretary of Health and Human Services? I've spent the last two years making it clear that I'll negotiate with anybody -- except hostage takers. Call me when you're ready to talk. But I'm not waiting: Elizabeth Warren is running this agency. We don't have time for games."

2. Stand up for Medicare and Social Security.

And speaking of Medicare ... The public has decisively rejected the Republican plan to end Medicare and replace it with vouchers (a plan which Republicans, in an Alice-in-Wonderland rhetorical move, deny ends Medicare or even uses vouchers).

It's time for a bold, gutsy defense of Medicare that takes a firm stand against any cuts that would hurt seniors financially. Republicans and their allies keep saving its "brave" of them to contemplate plunging seniors into a future of economic deprivation and reduced access to medical care. This is the President's opportunity to explain what's really brave: Confronting the powerful interests that want to keep our health care system exactly as it is.

The public feels just as strongly that Social Security shouldn't be cut. And it doesn't need to be, since it doesn't contribute to the deficit. The President can take advantages of all the polling which shows that the public would rather raise taxes on the wealthy than cut Social Security by proposing exactly that. It's the right policy, and the right politics. If the other side wants to shut government down to protect the rich by cutting benefits for old people, that's something voters deserve to see for themselves.

3. Defend our financial national security, too.

A strong homeland needs to be protected from attacks. It also needs to be protected from the predation of dishonest financiers, a collapse of the global banking system, and unnecessary depressions and recessions.

We've seen a wave of attempts to de-fang, de-claw, and de-fund the regulatory agencies that exist to protect us from these dangers, along with attempts to revoke key portions of the Dodd/Frank financial reform bill. That bill needs to be strengthened, not weakened. This isn't just a policy issue. It's a question of national security ... economic security.

4. Jobs. Jobs. Jobs. Jobs. Jobs.

After a relentless propaganda assault by the right (including the GOP and the initiatives funded by billionaire Pete Peterson), designed to convince people that deficits are the country's most urgent priority, the public's still not buying it. 39% say that jobs and the stagnating economy are our most pressing need, while only 15% are convinced that our biggest problem is deficits.

The President's been tacitly buying into the notion that the deficit is our most urgent problem, probably because it's one area where he feels he can cut a deal with Republicans. But that's just going to leave him taking the blame in 2012 for a failing economy and an unpopular deal.

Even if he can't get a meaningful job-creating program through Congress, he can propose it. Remember: Bold. Decisive. Gutsy. The President can say "This is what we need to get people back to work and jump-start our economy: Eighteen months of investment, followed by a smart financial plan that begins to address the deficit."

He may not get that program through Congress, but he can throw down the gauntlet: "Help me create jobs, or we'll go before the people next year and let them decide." That's a debate he can win, because the public's already on his side.

Leadership: The Sequel

The moral of last week's story was this: The public likes it when you give them something they want and do it in a courageous and decisive way. Know what else the public wants? Jobs, Medicare, Social Security, and protection from runaway banks.

Leadership in a democracy means giving the people what they want and need, things you promised as a candidate, and delivering them in a calm, cool, rational, and fearless manner. That's exactly the job that needs doing right now -- and I know just the guy to do it.

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This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign.

Hank Paulson: Ex-Goldman Sachs CEO, Ex-Bush Treasury Secretary - and Ex-actly Right

Richard Eskow — Thu, 17 Feb 2011 09:38:52 -0500

Somebody said that regulators need real power in order to be tough and effective. He said a strong, independent consumer protection agency is needed to help prevent the next financial crisis. And that we should help the millions of "responsible" homeowners hurt by the crash, instead of demonizing them.

This guy described Fannie and Freddie's assets as "bullsh*t capital" - $5.4 trillion of it, with taxpayers on the hook and potential debtors that included China and France. He also said this about the whole notion of privatizing a government activity: "To me, if there's a guarantee, they should be a (government) utility (rather than a private company) - why should people get wealthy off of a government guarantee?"

So is this socialist - Noam Chomsky? He's Hank Paulson, former Goldman Sachs CEO and Bush's Treasury Secretary during the 2008 meltdown. Paulson's interview with the Financial Crisis Inquiry Commission may leave you wishing he was still in Washington. The clarity of his comments highlight the absurdity of those politicians who claim that the FCIC reached a "partisan" conclusion. Here's a Wall Street powerhouse and GOP stalwart who's saying the same things - and more.

Paulson didn't just express opinions to the FCIC. He also provided anecdotes that illustrate the real problem with Fannie, Freddie, and the entire "privatize government" movement: When you give government backing to people with private-sector incentives, very bad things happen. So as the media distracts itself (and us) with the power struggle between Democrats and Republicans, a conflict it insists on describes as the "left" versus the "right," Paulson described problems and their solutions in ways that neither party's leaders are willing to discuss.

Paulson spoke to FCIC staff last April, and an internal memo summarized that conversation:

Not enough regulation + no consumer protection = catastrophe

Here's how the memo summarized Paulson's thoughts, under the heading "Sec. Paulson's Evaluation of Root Causes of Crisis" (all emphases in these excerpts are mine):

Sec. Paulson stated that the root causes of the crisis were housing policy in addition to the lack of regulation. He explained that many mortgages had big regulatory gaps and many mortgages issued in many number of states did not have an adequate regulator. Sec. Paulson recommended including in a regulatory blue print a consumer agency that focuses on consumer protection and a mortgage origination commission that evaluates the training and regulation that goes on a state level and will be able to evaluate the different programs so investors would be informed.

Look at what Paulson's saying: We need more regulation ("regulatory gaps") and more regulators. We need a "consumer agency that focuses on consumer protection" (we now have the Consumer Financial Protection Bureau - it was downgraded from an agency to a bureau by the Senate). We need better training and regulation at the state level (banks are now trying to overrule state regulations to escape the consequences of foreclosure fraud). Investors need to be better informed about where there investments are going (Mr. Paulson's former company is, of course, a major offender in this area).

How many of these ideas are being promoted today by either party?

And about that "housing policy": This may sound like the old right-wing theme that it's over-reaching when government tries to help poor people, but that's not what he's saying. As I hear it, he's saying that many people were encouraged to buy homes who would've been better off renting. The problem wasn't that government was too activist, but that the "ownership society" idea (and other government policies, including taxation) used government to encourage over-borrowing by some homeowners, enriching financial speculators while creating needless risk for borrowers.

A lot of innocent homeowners got hurt - and they weren't getting enough help.

Paulson held town hall-style meetings in hard-hit real estate markets like Burbank, Stockton, Orlando, Chicago, and Kansas City. "I was literally sickened in terms of what I saw in terms of what had happened to some people, the terms of the mortgages," he told the FCIC staff. He added that "lending essentially shut down on the private side, so now we were in a situation where very responsible people who wanted to buy or refinance to prevent losing their homes under very reasonable terms were having difficulty doing so."

Paulson described his own efforts to get loans out to these homeowners, which met with strong resistance from Fannie and Freddie's badly-incentivized executives. Since Paulson left office, the current Administration's HAMP program has only helped a few hundred thousand people although an estimated eleven million homes are considered at risk for foreclosure, and HAMP has harmed many others through the "extend and pretend" phenomenon. Meanwhile the House is planning to eviscerate funding for all housing programs in the next budget.

Ideological battles diverted Congress from the task at hand.

It's ironic how many politicians who get campaign money from Wall Street banks - banks which continue to collect billions in indirect government assistance - resist anything that might help homeowners, because American families who obtained mortgages from those banks are supposedly "undeserving." From the FCIC memo:

According to Sec. Paulson, the "march to reform" in 2008 was diverted because of "really what were inconsequential battles" in the House over the Hope for Homeowners legislation, which he called a "a flash point" in the debate about on one hand, bailing out irresponsible individuals, and on the other hand inflating the number of individuals it would actually help ... the battle over the program delayed GSE regulatory reform from being accomplished.

In other words, Representatives were trying so hard to score points by knocking homeowners that they delayed action on the big-picture reforms that were so desperately needed.

Significantly, ten Republican on the House Financial Services Committee crossed party lines to join with Democrats in forwarding Hope For Homeowners to the floor of the House, proving once again that common-sense reform needn't be and shouldn't be a partisan issue.

By privatizing Fannie and Freddie, we created a monster.

Intentionally or not, Paulson paints the picture of a monster: A company run by private-sector sharks, backed by government guarantees but unwilling to help the government carry out its policy - and aggressively lobbying to undermine the very principles that led to its creation. From the FCIC memo:

"I had been trying to work regulatory reform through Congress, the House was not a problem, the Senate was a big problem" ... Sec. Paulson said that he felt it was necessary to get the GSEs on board with reform ... "I wanted them [the GSEs] to reiterate in front of the Senators the commitment to raise capital," Sec. Paulson said. "And also, we had figured out that we were not going to get regulatory reform done if they opposed it. They had a lot of contacts on both sides of aisle, and were enormously effective, and they had different views ..."

Here's what Paulson doesn't say: Like Sallie Mae, the institution created to issue government-backed student loans, Fannie and Freddie were privatized and then went on a lobbying rampage designed to undermine their very own mission in order to further enrich the executives in charge. Paulson ran into roadblocks when he tried to get these "government sponsored enterprises" to collaborate with the government during an emergency.

"Regulators were downplaying [the capital situation]," said Paulson. "There was a little bit of regulatory capture going on, I think." That's an understatement: He's referring to $5.4 trillion in loose securities that had the implicit guarantee of the Federal government. $1.7 trillion was held by foreign countries, and Paulson explains how messy it became when he tried to explain this illogical and risky public/private marriage to leaders from countries like China and France. From the memo:

Sec. Paulson said that the enterprises had "flimsy capital" and he said that some people referred to it as "bullshit capital," (the deferred tax asset, for example), and that the regulator had no discretion to use its judgment with respect to the level of capital. Added to that, the country promoted a policy where the companies were chartered by Congress, "try to go around the world and explain to one leader after another what this implicit-not-explicit government guarantee was about. To me, if there's a guarantee, they should be a utility - why should people get wealthy off of a government guarantee?

Regarding those regulators, Paulson's putting it mildly. Fannie and Freddie's overseers " didn't have the power of a normal safety and soundness regulator," as he put it, adding: "I don't want to leave Washington without there being some major attempt to make it better and get a regulator who was more power."

Overall, Paulson paints the picture of runaway enterprises that were designed to fulfill a government mission but structured to do what private corporations do - with the corrupting influence of government guarantees creating a recipe for disaster. The end result was almost inevitable: Overly aggressive and reckless officers, backed by a Board of Directors Paulson described as "cheeky" and uncooperative.

Despite this experiences, what's the most popular recommendation in Washington these days for reforming Fannie and Freddie? Making them even more "privatized." Somebody really ought to listen to Hank Paulson. In fact, why not put him in charge of the SEC? I know, I know: He's ex-Goldman. But hey, Joe Kennedy did a damned good job at the SEC under Roosevelt. This guy's learned a thing or two, and we could use him now.

Besides, nobody ever called Hank Paulson a socialist.

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This post was produced as part of the Curbing Wall Street project.

GAO: Bank Regulators Not Even Looking At Foreclosure Practices

Zach Carter — Tue, 30 Nov 2010 15:13:00 -0500

A rather nauseating statement from a Government Accountability Office report on foreclosures:

Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices, such as whether foreclosures are completed; however, given the ongoing mortgage crisis, they have recently placed greater emphasis on these areas.

You read that right. Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it's still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.

The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick-- throw a family out, then just abandon the house altogether, don't even bother to sell it. The GAO says it's not happening too much, but any sane businessperson would make sure that it never happens. A simple loan modification would cut everybody's losses here, but the banks can't be bothered with that. And nobody is bothering the banks about it.

You may recall that there was a tremendous legislative battle earlier this year over the creation of a new Consumer Financial Protection Agency. The bank lobby and regulators at the Fed, the OCC and yes, even the FDIC, all argued that we didn't need it, while essentially everybody else said we did. But the existing regulatory chiefs all made essentially the same argument against the CFPA: We have several regulators who oversee consumer protection, and they're all just great at it. Creating a new agency that focused only on consumer protection would be end up destabilizing the financial system, because regulating consumer protection without looking at bank safety and soundness would jeopardize bank capital levels.

This argument was absurd at the time, most obviously because the existing regulators were simply awful. They totally failed to restrain predatory mortgage lending for nearly a full decade precisely because they considered "safety and soundess" regulation to be their only job. Safety and soundness was construed as "bank profitability"—if a bank had lots of money, it was less likely to fail. In practice, that meant regulators would allow consumer protection violations so long as they made money for the bank. With the mortgage crisis, this consumer protection failure ultimately lead to a safety and soundness catastrophe, but that's not actually very common. Usually predatory lending is very profitable, which is why banks do it.

So what happened after all the top regulators went out in public and repeatedly screamed that we absolutely can't allow them to lose their consumer protection authority? They totally ignored consumer protection regulation. Look at the excuse that bank regulators fed to the GAO (emphasis mine):

Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices.

Translation: Even after consumer protection violations wrecked the largest banks in the country, we still don't look at consumer protection unless it actually hurts a bank's bottom line, right away, right now.

The amazing thing here is that the legal liabilities from these foreclosure abuses once again could be putting bank solvency on the line. Global economy to Elizabeth Warren: Help!

Also, the link above is to a summary of the GAO report. The full report is here.