By Adam Levin
I understand that deregulators are committed to an ideology. We all need something to believe in, after all, and they believe in the power of markets to both create growth and self-regulate. That’s all very nice and looks good on paper, but given the past few years, that argument simply doesn’t pass the straight face test. I mean, let’s be real, deregulation nearly destroyed our economy as the past few years clearly demonstrate. But the deregulators aren’t giving up… and maybe they won’t until they’ve finished the job.
To quote Ronald Reagan, “There you go again.”
When the CARD Act was enacted, followed by the passage of the Dodd-Frank Act, I — along with almost every person who fogged a mirror in Washington — heard that the financial services industry was telling their constituent members, “Fear not, we have two more bites at the apple” – when the regulations are promulgated to flesh out the broad mandates of the laws and when budget time rolls around.
[Related: Are CARD Act Critics in Complete Denial?]
Well, they didn’t do so well at the first tranche of regulations, but I draw your attention to Section 1517 of the Continuing Resolution to fund government operations (also known as “Scream 5,” or the $60 billion budget slash fest).
The TGODs (the folks who wish to return to The Good Old Days) have slipped in a tiny provision that restricts the annual budget for the Consumer Financial Protection Bureau to $80 million in Fiscal 2011 (which ends in October). This is a reduction from $143 million and couldn’t come at a worse time for the regulator, or a better time for the regulated.
Reps. Barney Frank (D-MA), Rush Holt (D-NJ) and Brad Miller (D-NC) —(collectively “FHM”) — sent a letter to their colleagues saying that this “is a clear attempt to hamstring the new, independent agency as it hires staff and begins the critical work of providing clarity and security to the system of consumer finance.”
FHM went on to say, “This attempt is particularly concerning, because last year after an open process that included a rare, televised House-Senate conference, Congress agreed that in order for this new financial watchdog to be effective, it must be independent and adequately funded. By deriving its operating budget from the Federal Reserve, it would be insulated from the types of partisan fights on Capitol Hill in which we find ourselves today.”
President Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act, July 21, 2010.
Section 1517 seems to blatantly contradict both the letter and intent of the Financial Reform Act, which states that the CFPB’s funding be “derived from the Federal Reserve System pursuant to this subsection [and] shall NOT (emphasis added) be subject to review by the Committees on Appropriations of the House of Representatives and the Senate.”
[Related: The GOP’s Plans for Financial Reform]
Is it possible that the TGODs never got that memo? Is it more likely that the contributions from their friends in financial services have caused them to focus more on their bottom line than ours? Or, is it possible that they are in a frenzy to send the message that they are the Sweeny Todds of Constitution Avenue and that consumer protection is so … last year?
Rather than directly limiting the CFPB’s appropriation, Section 1517 merely seeks to prevent the Fed from disbursing the money to the CFPB. It’s an audacious manoeuvre, one that the big banks and their congressional compatriots are probably pretty proud of. But make no mistake: undermining the CFPB is bad for the nation and its citizens, most of whom are barely treading water in this lifeless economy. Banks are too focused on the immediate bottom line and still, inconceivably, fail to see the big picture.
The Big Picture & Consumer Protections (cont.) »
Washington DC photo by lawgeek, via Flickr
Official White House Photo by Lawrence Jackson