Richard Cordray better be a bulldog

Word out from Washington this morning says President Obama didn't pick Elizabeth Warren to be head of the new Consumer Financial Protection Agency. And while that's not a big surprise since the business-toady Republicans were so deadset against her, what can be said is that the President's choice for this job, former attorney general of Ohio Richard Cordray had better be her equal. He'd better be, as I said above, a strong bit of a bulldog so something can really be done by this new agency to protect the American public from the kind of nonsense the business community got away with in the last few years since it brought the nation and the world to near-collapse. Here's hoping. Here's what stinks about this: "Her (Ms. Warren's) candidacy was passionately supported by liberal members of Congress and consumer advocacy groups. But she never won the full support of the president or his senior advisers, particularly the Treasury secretary, Timothy F. Geithner, in part because of her independent streak and her outspokenness, which at times put her at odds with the administration." Timothy-freaking-Geithner? Like we care about HIM? He's from the banking industry. He's exactly the kind of person we DON'T want having input on this. It's precisely because Elizabeth Warren was outspoken that she came to prominence, for one, and why, secondly, she would have made a great candidate for the first Director of this agency. Mr. Cordray had better be good, that's all there is to it. Link: http://www.nytimes.com/2011/07/18/business/former-ohio-attorney-general-picked-to-lead-consumer-agency.html?_r=1&ref=elizabethwarren

Another success for the Obama Administration--and us: financial reform

Creating a consumer agency: Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Fees paid by banks fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It would not have power over auto dealers. Credit scores: All consumers have been able to get one free credit report a year from the credit rating agencies. But the bill would also allow a consumer to get an actual credit score along with a report. Interchange fees: Lawmakers want the Fed to crack down on debit card swipe fees, which retailers pay to banks to cover the operational cost of transferring money. The Fed could cap the fees and make them more reasonable and proportional. Banning 'liar loans': Lenders would have to document a borrower's income before originating a mortgage and verify a borrower's ability to repay the loan. Mortgage help for unemployed: Unemployed homeowners with good credit would be eligible for low-interest loans to help them avoid foreclosures. The bill would spend $1 billion on such relief, using funds that had been directed for Troubled Asset Relief Fund bailing out the financial system. Fixed-equity annuities: Prohibits tougher federal rules on life insurance products, in which customers pay a lump sum upfront in exchange for monthly income over time, pegged to an index. The Securities and Exchange Commission had been gearing up to step in and start requiring more disclosure for these products, often sold to seniors, that are currently regulated by state insurance commissioners. Lawmakers decided to stop the SEC from tougher federal regulation. Too big to fail New oversight power: Creates a new 10-member oversight council consisting of financial regulators to look out for major problems at financial firms and throughout the financial system. The Treasury Secretary gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council also has veto power over new rules proposed by new consumer regulator. Unwinding powers: Gives the FDIC new powers to take down giant financial firms in the same way it takes down banks. Banks would be taxed to reimburse the federal government for the cost of resolving these firms after a failure occurs. Breaking up banks: Gives regulators strengthened powers to break up financial companies that have grown too big, but only if the firms threaten to destabilize the financial system. Checking on the Fed: Allows Congress to order the Government Accountability Office to review Fed activities, excluding monetary policy. Audits would be allowed two years after the Fed makes emergency loans and gives financial help to ailing financial firms. Forcing 'skin in the game': Firms that sell mortgage-backed securities must keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk. Financial system fee: Banks and financial firms would be taxed to pay for the $19 billion cost of implementing the Wall Street reform bill. Risky bets Regulating derivatives: Attempts to shine a light on complex financial products called derivatives that many blame for bringing down American International Group (AIG, Fortune 500) and Lehman Brothers. Would force most derivatives to be bought and sold on clearinghouses and exchanges. Some derivatives, including those traded by agriculture companies and airlines to mitigate risk, would still be unregulated. Spinning off swaps desks: Big banks that want to engage in nontraditional bets, such as on mortgage products or certain commodities, would have to spin off their swaps divisions. Reining in risky bets: Limits giant Wall Street banks from making trades on their own accounts, although with a long lead time and opportunities for delays up to seven years. While the original proposal would have banned banks from owning hedge funds, the bill would allow banks to sink up to 3% of capital into hedge funds or private equity funds. Improving credit ratings: Agencies that rate securities must disclose their methodologies. The Securities and Exchange Commission would have to study a way to find an independent way to match credit rating agencies with financial firms seeking ratings. After two years, they'd have to implement such a process, or appoint a panel to independently match ratings agencies with firms that need securities rated. Curbing executive pay: The bill would also impose new rules for how all publicly-traded companies, not just banks and other financial firms, pay top executives. Shareholders will be given a nonbinding advisory vote on how top executives are paid while in office. Shareholders also get a nonbinding advisory vote on executives' outsized severance payments, or so-called "golden parachutes." The new rules would also beef up oversight of pay practices within the financial industry, which some critics have suggested helped fuel the crisis by encouraging workers to place risky bets. The bill, for example, would require industry regulators to draft their own set of rules aimed at eliminating risky pay practice among banks and other financial firms. Link to original post: http://www.cnnmoney.com/2010/06/25/news/economy/whats_in_the_reform_bill/index.htm

Don't say good things are not and cannot come out of Washington

Good news for the US.

To me, anyway, and, I think to anyone concerned nothing was going to be done after the collosal near-collapse of our economy in the last year.

"The House approved a Democratic plan on Friday to tighten federal regulation of Wall Street and banks, advancing a far-reaching Congressional response to the financial crisis that rocked the economy."

The good news is first, that they did something--they recognized that we need to protect consumers from fraud and abuse in our financial markets--then, second, that they instituted some protections. They went through with some regulation.

That's hard to do lately, in this country.

If there's bad news, it's that they felt they had to create a new agency to do it.

Why couldn't some division of the Commerce Department or some other, already-existing agency do this? That would have been far more preferable.

More agencies. More budgets. More spending.

But my favorite part of all this is the following--check this out from "The Party of No":

"But it's worth noting that just one year after Wall Street recklessness pushed the global economy to the brink of wholesale collapse, exactly zero House Republicans voted for watered-down safeguards, deeming them too onerous. Indeed, their unanimous opposition to Wall Street accountability came just a few days after the House Republican leadership huddled with more than 100 lobbyists to rally opposition to preventing Wall Street irresponsibility."

If this batch of Republicans didn't hurt our country so much, I'd love them for the humor derived from their hypocrisy.

Anyway, better this than having done nothing, by a long shot. That last tumble our markets and country took were far too dangerous.

And stupid.

More good things from this White House

Notice came yesterday from the US House of Representatives that a new agency is finally being created to "regulate home loans, credit cards, savings accounts and other financial services."

The agency is to be called the Consumer Financial Protection Agency.

Let's hope it has some teeth and can do its job and do it well.

It's unfortunate, I think, that we need this additional function in our government and yet another new agency but I think it's important we do, indeed have it.

If we learned anything from the last couple of years, it's what can happen when business isn't regulated so out-and-out theft doesn't occur under the heading of "business as usual."

Considering what's happened to our banking, mortgage and credit sectors and what literally thousands of unscrupulous lenders did, first to their clients and then, ultimately, to our economy, what with our banking and credit crisis and collapse, it seems incredible anyone could voice any complaint about it.

But the bankers and business sector is, let there be no doubt.

The thing is, we need to get the banking and insurance (and all other corporations and their lobbyists and money) out of our government.

And the only way to do that is to have true, complete, bold, in-your-face campaign finance reform, with the corporations thrown out of both the process and ultimate legislative product.

But the American people, sadly, don't connect those dots.

Until that happens, until we all truly revolt for this result, it will remain more of the same, regardless of the political party in power.

There are two things about this, though, that are worth noting--one a question, the other an observation:

First, it would be good to know if this important work couldn't be done within an existing agency, like Commerce or something, so we don't create yet another bureaucracy that ends up living for it's own success.

Second, unfortunately, it's not a sure thing that this consumer protection agency will be created. Bankers and their money being what they are--and our government being how it is, subject to yet more lobbyist's money, etc.--this may not get out of Congress. It's too early to tell.

Sure, we're doing somewhat better now, as citizens and consumers, with this Administration and political party, compared to the previous one but we won't have that true, complete reform unless and until we all push mightily for said campaign finance reform.

That's the only thing that will finally get all the ugly money out of our government that is corrupting the officials, the process and the ultimate legislation.

God, I miss Molly Ivins.

Link:
http://hosted.ap.org/dynamic/stories/U/US_FINANCIAL_OVERHAUL?SITE=TXMCA&SECTION=HOME&TEMPLATE=DEFAULT
http://hosted.ap.org/dynamic/stories/U/US_SHRINKING_FINANCIAL_OVERHAUL_ANALYSIS?SITE=TXMCA&SECTION=HOME&TEMPLATE=DEFAULT