LATEST UPDATES: Tell us how your call went in the report back section right here, or scroll down below. We have had so many calls and so many reports back, it’s really great to watch the staffers start to get it and know we’re around. This week, our targets are Sen. Johnson, Rep. Frank, Sen. Corker, and Sen. Reed. TPM reports on the four New Dems weakening measures behind closed-doors, can you call them and report back?: Rep. Luis Gutierrez (D-IL), (202) 225-8203; Rep. Gregory Meeks (D-NY), 202-225-3461; Rep. Mel Watt (D-NC), 202-225-1510; Rep. Dennis Moore, Chair (D-KS), (202)225-2865. Rep. Frank has tried to gut provisions to reform credit rating agencies, showing where he is going with the bill… The Senate agreed to expand auditing of the Fed – 1 BIG WIN SO FAR. Our #2 reform discussed now, seems like a win.. Thank you for making the calls! (Follow on @wayfwd, FaceBook, riski)

We’re going to make sure there are no backroom deals that effectively gut the best reforms currently in the bill — we’ve launched “Call-in Days for the Big 3 No Bailouts Reforms” to put every decision maker in the spotlight for gutting or keeping the Big 3. We have 14 days until June 24 to influence the financial reform bill to be something worth passing. So, yesterday on Tuesday, today on Wednesday (6/16), and tomorrow on Thursday (6/17), please help us get enough people so it’s like we’re walking right into the backroom with them and slapping their hands if they do something bad. We’ll update our list on the slimiest and worst on financial reform. Full list below.

Sign up for a day that works for you — you just need a 5 minute chunk of time free — and we’ll make your call effortless. If you’ve already signed up and when you finish your call, add what you find out in the report back section here. As soon as we hear back from you, we’ll update who is acting the sleaziest (you can also report back at #finreg #716 on twitter).

We need to call as much as each of us can to stop government support and incentives for banks to become bigger and riskier – this is structural reform.

WHAT’S HAPPENING IN THE LAST LEG OF FINANCIAL REFORM? The financial reform bill is going into the final stage in the legislative process this week and bought-out members of Congress are trying to stealthily remove all the provisions in it that the big banks oppose. The financial reform bill would be a pure product of lobbying and big banking if it were not for the just a handful of “No Bailout Reforms” that are still in the bill as we speak. Can you join us in making sure that conferees don’t gut the strongest provisions in the financial reform bill behind closed doors?

No-Bailout Reform #1, is Section 716, “PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES”. Currently, the Senate financial reform bill still has language in it that will stop the biggest, most dangerous banks from getting federal bailouts for their riskiest gambling. The provision that provides for this would require banks to spin off the derivatives activities into separate entities without access to discount Fed money and FDIC guarantees. It is structural reform. This is the main provision that our conference committee members are being asked to gut by the lobbyists. 716 literally says this in its own bill text. Without this language financial companies that turned themselves into banks for the purpose of receiving bailouts under the TARP will get to stay bailout recipients in perpetuity. Without this language, the 2008 crisis will lead to a permanent situation where the government continually subsidizes derivatives trades, which were at the heart of what caused the crisis. Here’s more from Bankster.

No-Bailout Reform #2, STRONG CAPITAL REQUIREMENTS FOR BIG AND SMALL BANKS: When banks make their bets, they’re supposed to put some money down. Over the years, the largest banks received exemptions to how much, and therefore their bets got riskier. This time around, Senators Collins and Representative Speier have introduced complementary amendments in the Senate and House to make sure that the money these banks put down for their bets is real capital and is enough to keep the big banks from taking risks they can’t pay for and need to be bailed out by taxpayers. For strong capital requirements, the best of the House and Senate version need to stay. Here’s more from Rortybomb.

No-Bailout Reform #3, A NEW CONSUMER PROTECTION AGENCY: A signature reform of the Obama Administration and TARP watchdog Elizabeth Warren, an independent consumer watchdog agency can stop financial corporations from abusing consumers. “Subprime mortgages. Abusive and arbitrary rate hikes on your credit card. Payday loans. If you’re wondering who lets banks get away with this crap, there are more people at it than you think. There are no less than four federal regulators responsible for overseeing consumer protection in finance, and all of them are terrible,” writes Zach Carter. The Senate bill would house the CFPA in the Fed and allow the Fed to veto their rules proposal. That’s unacceptable. We need an independent CFPA, via the House bill, with full rule-making authority. More from HuffPo.

BIG REFORM #4: First and foremost, we’re advocates of breaking up the big banks. We fought for the Brown-Kaufman amendment to cap the size of banks before they get too big to fail, but it didn’t pass with the Senate bill. Therefore, we agree with Dr. Simon Johnson that Rep. Kanjorski’s amendment to allow regulators to break up the banks is an important part of the finreg bill and are happy to push for it. To see more reforms, see our blog post from Stephanie and Ruth.

Supporters of these measures are Nobel Laureate Economist Joseph Stiglitz and Paul Krugman, renowned Economists Robert Reich, Jane D’Arista, Dean Baker, Simon Johnson, Jennifer Taub, David Moss, Michael Greenberger, financial writers and advocates, Rortybomb/Mike Konczal, Ilan Moscovitz of the Motley Fool, Zach Carter of CAF/Alternet, Public Citizen, CAF, David Dayen/FireDogLake, BanksterUSA, McJoan of Daily Kos. Join them!

Latest movements for the strongest reforms: Simon Johnson, Rortybomb, FireDogLake. CNBC says banks will lose on 716. Fed Chiefs support 716. NYTimes editorial.

AND NOW, WHO IS WATERING DOWN THE BILL? We have figured out who is trying to water down the bill thanks to the many people who have told us what they have heard in the comments of this post and what has been said in public.

Who of the 28+ are running the sleaziest deals (today the top 4 are Frank, Reed, Johnson, and Corker)?:

Big Bank Defenders (they would love to hear from you):
* Rep. Luis Gutierrez (D, IL) (202) 225-8203 here, here
* Rep. Spencer Bachus (R, AL) 202-225-4921 report, report
* Sen. Jack Reed (R, RI) (202) 224-4642 here, CFPA
* Rep. Dennis Moore, Chair (D, KS) 202-225-2865 blue dog, here
* Rep. Mel Watt (D, NC) 202-225-1510 bank cash, pro-CFPA, here
* Rep. Gary Peters (D-MI), (202) 225-5802 here, here
* Sen. Saxby Chambliss (R-GA) 202 224 3521 here

* Rep. Scott Garrett (R, NJ) 202-225-4465 C-SPAN, this
* Sen. Mike Crapo (R-ID) 202-224-6142 here
* Rep. Judy Biggert (R, IL) 202-225-3515 bad
* Rep. Gregory Meeks (D, NY) (202) 225-3461 bad, here
* Rep. Jeb Hensarling (R, TX) 202-225-3484 bad
* Rep. Edward Royce (R, CA) 202-225-4111 here, here
* Sen. Judd Gregg (R-NH) 202 224 3324 report, article
* Sen. Richard Shelby (R-AL) 202 224 5744 here, here
* Sen. Bob Corker (R-TN) 202 224 3344 here

Public Defenders (so far):

* Rep. Paul Kanjorski (D, PA) (202) 225-6511 here
* Sen. Blanche Lincoln (D, AR) (202) 224-4843 gutting, reverting, report
* Rep. Collin Peterson (D-MN) 202-225-2165 prefers House version, maybe
* Sen. Tom Harkin (D, IA) (202) 224-3254 here
* Sen. Patrick Leahy (D, VT) (202) 224-4242 here
* Sen. Tim Johnson (D-S.D.) 202-224-5842 pro-CFPA
* Rep. Maxine Waters (D, CA) (202) 225-2201 here, here

MYSTERIOUS (they need calls ahora)

* Sen. Chris Dodd (D, CT) (202) 224-2823 report, and report, report
* Sen. Charles Schumer (D-NY) 202 224 6542 report, most fin cash, here
* Rep. Mary Jo Kilroy (D, OH) 202-225-2015 neutral
* Rep. Shelley Capito (R, WV) 202-225-2711 (against)
* Rep. Carolyn Maloney (D, NY) (202) 225-7944 unclear, here
* Rep. Barney Frank (D, MA) (202) 225-5931 no, yes, yes, here, YES

We hope that you are helping to call, join us for the next day or call right now, and further target the few people we need to reach. Then, help us finish the job — we can’t wait to hear from you so we can update our list of sleaziest deals — tell us what you hear in the comments of this post. Thanks for making it happen!

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written by Stephanie Remington and Ruth Robertson, great ANWF organizers in California.

Today is the day of our call-in days — please call — as they start to hear from us, they have to move. We’ve got a few days to get good reform – the details matter.  The banks are spending a fortune lobbying congress to keep things the way they are, but the rest of us (on the receiving end of their catastrophic risk-taking and blatant fraud) outnumber them.  We can’t lose sight of the public interest because we can get what we want by forcing their hand. Lincoln, Dodd, and Congress aren’t going to come back and say, “hey, you really changed our positions, activism really matters!”, but their omissions should are remiss.

Of course the problem with financial reform in the first place is that we’re tackling the entire system at once, including the small details. So many amendments are about very specific, obscure financial operations, which many people just don’t find that interesting. The details have hurt our fight for strong structural reform — everything is presented as and in one sense is complicated, some people just completely tune it out. Well, there are clear, overarching, very general, extremely structural solutions to the key issues leading to the financial crisis.

We only care about structural reforms that address key problems of financial crises:

Read the rest of this post here.

1.   First and foremost, Section 716 which addresses the problem of derivatives is the strongest and currently most possible reform we can push for. It’s gone through many cycles, and our readers have successfully fought through them. The good news is — it is still in the bill. It is the most contentious provision and it will define how strong the Democrats are on the big banks.

No other provision will accomplish what 716 does in terms of removing the subsidy enjoyed by a handful of institutions. Section 716 is the best chance for ending the ongoing threat to the taxpayer in the the current business of derivatives. At the heart of 716 is the structure it provides making a clear separation between the business of banking and that of marketing and trading derivatives. It provides a structure that protects the core financial functions of banks without extending those protections to cover highly risky derivatives transactions.
Section 716 will contribute to shrinking the size of individual institutions’ positions and the market itself by requiring that dealing and trading derivatives move to separately capitalized affiliates that do not have access to Fed lending facilities or FDIC guarantees. The huge capital reserves of institutions that dominate the U.S. market will no longer be available to support their outsized positions. The capital of derivatives affiliates, even if within the same holding company, will have to be much smaller, creating opportunities for non-bank firms to enter the market. Section 716 eliminates the risk the largest banks incur through marketing and trading OTC derivatives. It will help reduce the risk to the system as a whole by encouraging an expansion in the number of dealers in derivatives.
Blanche Lincoln (D-AR) is behind 716 and she won her Democratic primary on the strength of committing to tough new rules on Wall Street. Unfortunately, 716 suffered a couple of casualties that will be fatal to reform if left untreated. But, Sen. Maria Cantwell’s (D-WA) amendment (4086) addresses the loophole.

Lincoln wrote the whole of the derivatives section, including the “safe” proposals — she specified the means to end the biggest source of trouble with derivatives – that “the entire market operates in secret.”  She required “central clearing,” a means of shining light on and watching over trades. This provision was undercut by language added by Democrats (Section 739, paragraphs A and B).  This section would codify into law the now common practice of refusing to prosecute certain criminals for their demonstrably illegal activity. Section 739, paragraphs A and B, must be removed or voided by including Maria Cantwell’s amendment 4086 – it must be added for Lincoln’s section to work.

The Obama administration (notably, Treasury and Larry Summers), Senate Banking Chair Chris Dodd, and House Financial Services Chair Barney Frank propose a “substitute” (Merkley and Levin’s strengthened version of the Volcker rule). M-L must be in addition to, not instead of, Lincoln’s section.  There’s no overlap between them; neither can substitute for the other.  Mary Bottari of Bankster USA outlines five unique features of Lincoln’s section here.

2.  The Volcker Rule: Zach Carter, Fellow at Campaign for America’s Future, reports that “The best version of President Obama’s signature Wall Street reform was an amendment written by Sens. Jeff Merkley, D-Ore., and Carl Levin, D-Mich. It was never voted on in the Senate and the House bill contains no version of any ban on proprietary trading by commercial banks. The Senate bill does include a weak version of the Volcker Rule that bank-friendly regulators can easily defang if they choose.”  We need to push for inclusion of Merkley-Levin (SA 3931) in the conference and for negotiations that lead to a concrete ban on gambling with taxpayer money.

3. It is also important that we NOT forget about the Kanjorski amendment. While this amendment, introduced by Congressman Paul E. Kanjorski (D-PA), does not impose a hard size cap on banks, it proposes a number of potential objective criteria that could be used to determine when banks need to be broken up, including the “scope, scale, exposure, leverage, interconnectedness of financial activities, as well as size of the financial company.” It would greatly strengthen the hand of regulators and reinforce their power to break up those banks.  As the amendment is written, a great deal of discretion would remain with the regulators, so it is much weaker than what is really needed. However, the Kanjorski amendment serves as a public reminder that “bailouts are bad” and it also increases the likelihood that management and directors would be replaced in a failing large bank.

4.   An independent Consumer Financial Protection Agency: Dodd gutted an original version, but it can be restored.  In its current form it wouldn’t actually protect consumers because, among other problems, it would be housed within the Fed which has yet to use its substantial, already-existing authority to protect consumers. As such it is the staying tuned to tip their hand.
Here’s a great video clip of an interview with Elizabeth Warren, Chair of the Congressional Oversight Panel created to oversee TARP bailout funds. Zach Carter reports that currently, “the House version of this agency is generally stronger than the Senate version, with more independence and broader authority. But the House version also exempts auto dealers from CFPA oversight which the Senate version does not.”

5.   Capital and leverage: From Zach Carter: “Thanks to Sen. Susan Collins, R-Maine, the Senate bill contains the strongest language to toughen capital requirements at big banks, forcing them to have more money on hand to cushion against losses. There is no corresponding language in the House bill, but the House legislation does contain a related provision capping bank leverage–the amount of borrowed money banks can use to place bets in the capital markets casinos. How these good amendments fare in the
conference committee will significantly impact how the financial system functions over the next decade.”  More from Rortybomb.

6.   Fed Audit: Congressman Ron Paul has been called the key battler against central banking and against the Federal Reserve and is the author of the book, End the Fed. His supporters say he has worked tirelessly to bring accountability to what they call “the secretive bank”.   The Congressman, who says he has worked to bring transparency to the Federal Reserve Bank for the past 30 years, introduced a bill to audit the Federal Reserve, but that bill did not make it into the Senate version of the Financial Reform Bill.  Sen. David Vitter (R-LA) later reintroduced an amendment  with the original Audit the Fed language, but the Senate rejected that amendment on May 11, 2010 by a 37-62 vote.

7.   Rating agencies: From Zach Carter: “Sen. Al Franken pushed through an amendment that substantively changes the corrupt business model at rating agencies. Right now, rating agencies do not get paid by the investors who use their ratings, but by the very banks who are issuing those securities. Franken would end this system, having regulators select which rating agencies rate which securities, rather than the banks who issue the securities. The House bill largely leaves the rating agency business model unchanged.”

8.   Swipe fees: From Zach Carter: “When you buy something at a store with a credit or debit card, Visa and Mastercard charge the store a fee. The store, in turn, charges you more for its products, making everything everybody buys more expensive. Sen. Dick Durbin, D-Ill., pushed through language cracking down on debit card fees, but there is no language addressing swipe fees of any kind in the House.”

9. Too big to fail: Sherrod Brown and Ted Kaufman introduced an outstanding bill that would have ended TBTF.  It did not pass the Senate, but is crucial to success of financial reform.

Some of the main obstacles to achieving true reform are people in the Obama Administration, as well as bankers spending big money on Congress members to get their support.  Along with our demands for specific language in the bill, we need to be pushing for the removal of Summers and Geithner and the appointment of a new Fed Chairman, which would effectively – and necessarily – get rid of Bernanke.  These people, among a larger group of insiders and captive regulators, must be replaced with people with successful track records, who believe in true reform, and who will push for it instead of blocking it at every turn.

We have, in Joseph Stiglitz, Robert Reich, and Simon Johnson, three people whose expertise and commitment to reform make them ideal candidates to replace Summers and Geithner and move our nation toward a healthy economy–an economy that will never again be at the mercy of the big banks. For a new Fed Chairman Joseph Stiglitz, for Secretary of the Treasury Robert Reich, and for Obama’s Economic Advisor, Simon Johnson would make a true Dream Team.

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By not ever directly answering to the problems that come about when you do get big enough that you’re too big to fail, Krugman is wiping away the problem of too-big-to-fail with one fell swoop, as if the problem were simply a problem on a dry erase board.

Krugman says,

“So what’s the moral of this story? As I see it, it’s a caution against silver-bullet views of reform, the idea that cracking down on just one thing — in particular, breaking up big banks — will solve our problems. The case of Georgia shows that bad behavior by many small banks can do as much damage as misbehavior by a few financial giants. And the contrast between Texas and Georgia suggests that consumer protection is an essential element of reform. By all means, let’s limit the power of the big banks. But if we don’t also protect consumers from predatory lending, there are plenty of smaller players — both small banks and the nonbank “mortgage originators” responsible for many of the worst subprime abuses — that will step in and fill the gap.”

He is taking a fundamentally important reform measure, breaking up the banks, and squashing it in the palm of one of his mighty hands by hinting that we advocates are using it as a silver bullet. I don’t think any of us are — we simply think it is a reform measure that definitely needs to be on the list of bank reforms. And on the list of structural changes to our economy and democracy, it’s number one for various reasons, but not singular either (there is a whole host of large corporation distortion issues that should be on this list).

I haven’t seen an article from him that significantly addresses the problems of excessive and collusive political power of extremely large banks, the issue that there is no efficiency gain for banks over a certain size, the overpricing and the trend of big banks to hide their risks, the inefficiencies of our political system introduced by heavy lobbying brought on by “big-banks-or-other-big-corporations-are-freedom” lobbying groups (Chamber of Commerce spends more than the RNC and DNC), the distortion of the market when big banks pass policies in their name and get regulation waivers, the ability of the biggest and most catered-to banks to take on disproportionately greater risk, the fact that the big 5 is responsible for 95% of the derivatives market.

Let’s see Krugman tackle these issues without looking at the macro-issue of banks just being too big, and our financial industry being too big. Krugman is well-loved by liberals who depend on Krugman for updates. If you’re one of them, just get a few more sources to round out your understanding (other readable big time economists are Baker, Stiglitz, Reich, Akerloff, etc. etc.).


Another way that big banks can take on more risk is because they can pay out bigger bonuses. Being big is a cyclical problem, that’s the main problem that those intent on understanding how free markets can actually work must tackle (those who have a leg up just get bigger and turn consumer choice into consumer defaults). When compensation is linked to short-term profit as it is now, CEO’s have tended to make riskier bets that show a gain in the short-term and not worry about the long term. Compensation is cited as one of the reasons for the huge leap in subprime loans, securities, OCD, etc. activities.

On the inefficiency of policy making when excessive corporations are allowed to reign supreme, Bloomberg reports:

Treasury Secretary Timothy F. Geithner can look no further than Wall Street where the banks that received the biggest taxpayer bailouts are seeking to reap trading profits from securities rescued by the government.
Only months after it was started, the U.S. program designed to purge debts of no immediate discernable value from the balance sheets of troubled banks has helped transform the frozen debt into a money-maker as the bonds have rallied. Bank of America Corp. and Citigroup Inc., who received 22 percent of the $418.7 billion American taxpayers loaned to troubled financial institutions, boosted holdings on their trading books of home- loan bonds that lack government guarantees while investors were raising cash for the program, according to Federal Reserve data.
Charlotte, North Carolina-based Bank of America along with Citigroup, Morgan Stanley and Goldman Sachs Group Inc., all based in New York, added a combined $3.36 billion of the debt, for which there were few buyers as recently as March, to their short-term trading assets during the third quarter, up 16 percent from the second quarter, the most-recent data show.
Prices of these securities may slump again, leaving the banks exposed to potential losses that the Treasury Department’s rescue plan was designed to mitigate, said Joshua Rosner, a managing director at New York-based Graham Fisher & Co., which advises regulators and institutional investors.
‘Speculative Trade’
“It’s a trade that will likely work out, but it’s still a speculative trade, which is not what a taxpayer should want from firms that have only recently come out of critical care,” Rosner said.
The Public-Private Investment Program was introduced in March by Geithner as a means of helping struggling banks by reviving the market for unpackaged loans and mortgage securities that aren’t backed by government-supported institutions, such as Fannie Mae or Freddie Mac. Under the program, asset managers were supposed to raise money from investors and, with additional capital and loans from taxpayers, buy as much as $1 trillion in toxic assets from U.S. banks, freeing up money for lending.
It’s “absolutely ridiculous” that banks, which were expected to reduce their holding of such volatile mortgage securities, bought them before the government program was running and may now profit, said Michael Schlachter, managing director of Wilshire Associates, the Santa Monica, California- based investment-consulting firm. “Some of them created this mess, and they are making a killing undoing it.”

In a paper by a Fed Chief and an academic professor, we get to see how big banks have a market and political advantage.

In the paper, How Much Did Banks Pay to Become Too-Big-To-Fail and to Become Systematically Important? which was recently made publicly available on SSRN, we estimate the value of the too-big-to-fail (TBTF) subsidy. The special treatment provided to too-big-to-fail institutions during the financial crisis that started in mid-2007 has raised concerns among analysts and legislators about the consequences of this for the overall stability and riskiness of the financial system.

Our empirical results are consistent with the hypothesis that large banking organizations obtain advantages not available to other organizations. These advantages may include becoming TBTF and thus gaining favor with uninsured bank creditors and other market participants, operating with lower regulatory costs, and increasing the organization’s chances of receiving regulatory forbearance. We find that banking organizations are willing to pay an added premium for mergers that will put them over a TBTF threshold. This added premium amounted to an estimated $14 billion to $17 billion extra that eight banking organizations in our data set were willing to pay for acquisitions that enabled them to become TBTF (crossing the $100 billion book value of total assets threshold).

While these amounts are large, they are likely to underestimate the total value of the benefits that accrue to large banking organizations. Organizations seeking to obtain TBTF benefits are not likely to be forced by the marketplace to pass on anywhere near the full value of these benefits to the shareholders of their acquisition targets.


If you look at competition theory, which has not been brought into this debate about the big banks enough, the financial industry is considered over-concentrated and barriers to entry for new or small to medium-sized banks are high. Williamson recently won a Nobel for his research on regulation as it relates to competition. Williamson summarizes a thoughtful position that deserves further investigation: direct regulation or size caps? He is obviously being thoughtful here:

“According to Williamson’s theory, large private corporations exist primarily because they are efficient. They are established because they make owners, workers, suppliers, and customers better off than they would be under alternative institutional arrangements. When corporations fail to deliver efficiency gains, their existence will be called in question,” according to information on the research released by the Royal Swedish Academy of Sciences. “Large corporations may of course abuse their power. They may for instance participate in undesirable political lobbying and exhibit anticompetitive behavior. However, according to Williamson’s analysis, it is advisable to regulate such behavior directly rather than through policies that limit the size of corporations.”

Nevertheless, size restrictions is a matter of politics and therefore the market. Honestly, whether or not size caps are the best way is irrelevant economically on one level — if we allow our political system and cultural capital to be taken over, economics follows suit.

I’ve seen this one article on competition theory as it applies to banks in the mainstream media. I applaud the article. Here’s to the Financial Times:

However, as a policy the case for examining competition in banking – provided it could be done fairly without obvious political rigging – is not at all outlandish. A far-reaching investigation could enrich our understanding of the financial system in the years running up to the crisis. What share of record financial sector profits before 2008 was attributable to market power as opposed to undercapitalisation and the sale of innovatory financial products, whether those that created value or those that did not?

Moreover, a push on competition would support legislative efforts to tackle the problem of banks that are too big to fail. Given near-universal agreement that it is undesirable to have a system dominated by relatively few, big and highly-interconnected firms, why not investigate why it is so difficult for smaller banks – and boutique investment firms – to take market share from dominant rivals?

Tax cuts are an egotistical and masturbatory idea and contribute to making the advantaged bigger. Economists View writes: “What, after all, is the difference between a direct spending program and a refundable tax credit? Nothing, really, except that Republicans oppose the first because it represents Big Government while they support the latter because it is a “tax cut.” I think these sorts of semantic differences cloud economic decisionmaking rather than contributing to it.” Big banks and our largest corporations have gotten hidden subsidies and tax cuts for being big.


A few months ago, I argued that maybe we should let the banks win on the Consumer Financial Protection Agency and slip in real structural reform where they’re not looking… I still support efforts to pass a CFPA, but we do need to make sure we’re gaining overall rather than losing overall in the financial reform fight. Last week, is turning out to either be a scapegoat or what I hope, a sacrifice.

In light of this, Republicans seem to be settling on a strategy: Give the Democrats much of what they want on the consumer agency and bet that Democrats won’t be too picky about the rest. If the bet pans out, the industry and its GOP allies would, in effect, be trading a robust consumer agency for a chance to scale back a number of highly consequential but below-the-radar reforms. But will it?


As the case of Wal-Mart’s largesse shows, and the fact that all the big banks once owned both Visa and Mastercard, antitrust has an important role to play to protect consumers against the big guys. Antitrust should be triggered by political over-concentration or distortion — that would be one other needed reform not currently on Krugman’s list.

And finally, the state of inequality in this country is touched on by this segment on Bill Moyers. He’s absolutely thoughtful. Big banks have a lot to do with inequality in this country.

The Fed is sick right now, CFPA is the next step

On March 3, 2010, in The Public, by Tiffiniy Cheng

Dodd is at the head of the financial reform effort in this country and is proposing new measures this week in the Senate, seemingly mostly written by Corker. The proposal is weak on almost all points and gets us back to where we started. Consumer Protection Agency given to the Fed, the Fed more regulatory powers, nothing real on derivatives, nothing really on too-big-to-fail. 

The Fed is sick, it’s a feeding trough for the big banks. It has no accountability and has not upheld its stated mission to maximize employment in the country. But, it’s what big banks and undiscerning people think about by default and assign responsibility to by default. We’re here to change that. CFPA is set up to be democratized and transparent and independent — that’s what is important.

If you missed it, this Funny or Die video is doing amazingly well. Thank you, thank you for this god’s send. Please pass it on to your friends who haven’t gotten into bank reform or who lost their jobs…

AFR gave a great, strong statement on the status of the plans from Dodd in the Senate. I expect more of this from them in the weeks ahead:

“AFR supports the creation of a strong and independent Consumer Financial Protection Agency. We haven’t seen a real proposal for this yet. When we see one, we’ll evaluate it based on our concern that the agency be effective and not a captive of the forces that either caused the financial meltdown or failed to exercise their regulatory responsibilities. We need real protection for consumers from a still out-of-control financial sector, that’s our bottom line.”

There are some great quotes about why this plan is a bad idea:

The Hill reports,”Sen. Charles Schumer (D-N.Y.) cast doubt on a new compromise proposal for consumer financial protections, threatening its future in the Senate before it has been unveiled. Schumer said he is ” very leery of any consumer regulator being placed inside the Fed.” Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Sen. Bob Corker (R-Tenn.) are pitching a proposal to put a consumer protection office at the Federal Reserve. The proposal is significantly different than the administration’s original effort to set up a standalone entity.

Schumer’s comments are the strongest indication of how difficult it will be for the proposal to garner support in the Senate.”

“In my 20 years of trying to get the Federal Reserve to properly protect consumers, it has been an uphill, and very often unsuccessful, battle,” Schumer said.

If the banks are asking you to do something, it’s probably wise to do the opposite as they simply have their own profit to think about. Bank groups call for stronger Fed Reserve:

“Bank lobbying groups are calling on senators to support the Federal Reserve’s power to supervise small and large banks.”

This headline from HuffPo is notable:

Bipartisanship Is Not a Substitute For Real Reform

From the Big Picture:“What a splendid idea: A Consumer Finance Protection Agency whose sole purpose is to provide a set of standards for the finance industry when it comes to marketing their products to otherwise naive US consumers.

The original plan was to have a standard form for major finance purchases — mortgages, cars, revolving credit. This would allow consumers to 1) Understand the amount of money the  financing would cost them; 2) Determine if they could afford this product; 3) Allow them to shop competitively for the best rates.

Good idea, right?

Considering that we are a nation that made the Snuggie, the Sham-Ease, and Hair-in-a-Can all best sellers, a little impulse control is probably a good idea. More accurate cost disclosures of credit will also help. We are, after all, a country of math-phobic shopaholic shit junkies. Anything that can help us figure out whether we can afford our bigger purchases — like cars and houses — should be a no-brainer.

Unfortunately, the banking lobby, in conjunction with the auto dealers lobby, had other ideas. A simple mandate to have all mortgages shown compared to a plain vanilla 30 year fixed was thwarted. It was to be similar to the FDA nutrition disclosures on the side of your kid’s cereal box. Who, could possibly object to that?”

William Black, the famed regulator of the S&L crisis, is speaking on the issue of the possibility of losing the CFPA:

“The proposal to amend the Senate bill to place consumer protection in Treasury, rather than an independent regulatory agency with institutional incentives to protect borrowers, is a sick joke. This is not even a case of putting a fox in charge of the proverbial chicken coop — the foxes have already slaughtered the chickens. The only reason we were successful in reregulating the S&L industry during the Reagan administration was because the Federal Home Loan Bank Board was an independent regulatory agency. The administration hated our successful reregulation, which kept the debacle from developing into a Great Recession, and would have blocked it had we not been an independent regulatory agency.

Ryan Grim writes in
Senator Promises Floor Fight For Strong CFPA, “The Consumer Financial Protection Agency, a cornerstone of banking reform, won’t go down without a floor flight. Sen. Jack Reed of Rhode Island, the third-ranking Democrat on the Banking Committee, will introduce an amendment to financial regulatory reform on the Senate floor calling for a strong, independent CFPA if the bill that emerges from the committee does not include one, a Democratic committee aide told the Huffington Post Tuesday.”

And he quotes Frank:

“I was incredulous,” the Massachusetts Democrat said. “After all the Fed bashing we’ve heard? The Fed’s such a weak engine, so let’s give them consumer protection? It’s almost a bad joke. I was very disappointed.”

Also, you should probably note that, “Eleven CEOs from the largest property casualty insurance companies in the country have formed a new coalition to urge Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) to leave them out of the financial services overhaul legislation.

State Farm Insurance, Allstate Corp., Travelers Companies Inc., Chubb Corp. and Zurich Financial Services Group were among the insurers to take the unusual step of forming the Property; Casualty Leaders Coalition. The last time the insurers joined in a coalition effort was in 2005 over asbestos legislation.

“There is no public policy justification for taking funds from companies in our industry, especially on a pre-event basis, to bail out other financial institutions deemed to be overexposed to failing ‘systemic’ companies,” wrote CEOs from the coalition companies, including the ACE Group, Nationwide Insurance and Liberty Mutual. “Recoupment payments made to companies should come from the benefitting companies.”

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Dude Reform

On February 3, 2010, in Background and Research, Corporations, The Public, by Tiffiniy Cheng

The US Chamber of Commerce wants to be thought of as our public guardian. But, we simply can’t trust them. They’re trying to pass off their Stop The CFPA campaign as a friendly one, complete with spooky music. I have been asking our facebook fans and twitter followers if bad press is good press in this case. I’m not sure. This campaign is BS marketing, or rather dude reform.

So, above is Mr. Luntz. His “secret” memo leaked the other day — he apparently is the mastermind behind getting Republicans and big corporate dudes to respect and publicly empathize with the pain out there. The way these dudes are talking about it is so disingenuous I hope people despise it when they hear about it.

The problem with political discourse, and that is what we all are engaged in every day even if we don’t know it, is that these statements are so extremely well marketed that our less-politically educated friends believe these statements as long as they are said – no facts need to be used, just some passion, just some quip. Yet, statements from the left are so steeped in facts and boring language, they don’t get lodged in our brains. Our hope is in education and a revived political class or maybe even party. We should each keep educating each other on how to construct a fact-based and merit-based understanding of any given issue. I trust my own ideas because I have done the research and seen who stands to benefit from top-down, trickle-down policies. The Tea Party movement, for example, as detailed in a New Yorker article may be against Wall Street but pointing at half-baked indicators: “A second-generation Chrysler dealer, whose lot had just been shut down, complained that the Harvard-educated experts on Wall Street and in Washington knew nothing about automobiles… The district’s congressional representative, Geoff Davis, brought up the proposed cap-and-trade legislation favored by Democrats, and called it an “economic colonization of the hardworking states that produce the energy, the food, and the manufactured goods of the heartland, to take that and pay for social programs in the large coastal states.”

Wall Streeters are Republicans and don’t like social programs. They want to end Medicare and Lloyd Blankfein said so himself — they lobby against the majority and ask you to help them. They’re greedy, selfish bastards that have taken your hard work in states all across America and turned it into debt they can keep shuffling around and big government helps them.

What do we need? Not bigger government, we need quality government that work to keep themselves out of the market and helping just the filthy rich, they need to keep the playing field leveled so that there is the freedom and possibility for us Americans to have and create the kinds of jobs and lives we want.

Some tidbits from the memo:

“You must acknowledge the need for reform that ensures this NEVER happens again.”

WORDS THAT WORK. If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated.

When addressing the crisis, never forget its impact on your audience. Above all else, never EVER minimize the pain.

From Think Progress:

The most dishonest argument is that financial reform would “punish” taxpayers while rewarding “big banks and credit card companies.” In reality, top financial industry lobbyists are not only fighting proposed oversight regulations, but have said recently that they are opposed to “any regulation” at all.

Luntz, ever the publicity hound, leaks his memos out to the media to claim credit for the Republican charge against reforming Wall Street. While he is certainly a driving force behind much of the GOP misinformation, a closer look at his client list reveals that he is in fact being paid by the finance industry:

Hey dude, why would the CFPA be bad for the majority of Americans again? Now, back it up with some facts that answer the whole question and aren’t taken out of context. Well, at least let’s get our friends to do that.

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Big banks want Dodd to Dance with Them

On January 19, 2010, in Congress, Current Leadership, by Tiffiniy Cheng

As a reigning bank-focused Senator is about to retire, a financial industry lobbysist said that the reigning Senator Dodd will now be free to “dance with the special interests that brought him to the dance in the first place. Us, his loyal donors in the banking community.” But, we pay his salary now and what will he do as financial regulatory reform comes up and the next couple of months is considered the last dance of his stay in Congress?

Now that he is retiring, the corrupt, liberal, head honcho senator, Chris Dodd is most likely going to concede even more to the big banks in his signature reform bill going through Congress. Some say he would fight harder for the public to leave a legacy, but no one yet knows. The Consumer Financial Protection Agency is a measure included in the bill and is credited the most with protecting consumers against predatory and usurious products, yet its survival is in question because the big banks want it out of the bill. Ridiculous, right?

Dodd and the rest of Congress need to stop their shenanigans and tell the big banks NO for once!

The big banks are probably right that Dodd wants to dance with them because they brought him to the dance in the first place. It’s a weird thing for them to say, but if it’s true, say hello to the next economic crisis coming up and even larger banks sucking up more public money.

BanksterUSA made a video asking Dodd who he will be taking to the last dance of his career — Jamie Dimon of J.P. Morgan Chase or Elizabeth Warren of the fight for consumer protection. You can help fill out Dodd’s dance card and tell him to not flirt with the idea of dancing with the big banks. He can do some good and leave a legacy or he can just get super rich and gut the country at the same time.

It’s pretty clear that he will become a big bank lobbyist himself when he retires –he has been a recipient of some of the highest amounts of lobbyist cash and big bank political contributions, he also got a deal on his mortgage for his political power. What else is a man like that going to do because he can’t get elected again in 2010 and is forced to retire and loves the silent ring of A LOT of money in the bank?

Well, we can’t stop him from doing what he desires after he is out of office, but what about not helping the big banks on taxpayer dollars? Dodd, we pay for your pitifully small $200,000 salary. Do what we say. Sign the petition here.