Tuesday, Mar 9, 2010, 8:25 am
Weekly Audit: Doomsday for Consumer Financial Protection Agency?
By Alison Hamm, Media Consortium Blogger
Just when the Democrats need to be tougher than ever on financial reform, Senate Banking Committee Chair Sen. Chris Dodd (D-CT), seems to have given up completely and put the proposed Consumer Financial Protection Agency (CFPA) at risk.
Last fall, Dodd called the Federal Reserve's regulatory efforts an "abysmal failure." And yet, on March 1, he proposed housing a consumer protection agency within the Fed instead of establishing the CFPA as its own independent entity. This drastic change in strategy has left many Democrats shaking their heads. WTF, Senator Dodd?
A change in focus
As Andy Kroll reports for Mother Jones:
"Dodd appears to have switched his focus from out-reforming the White House to out-compromising just about everyone. As the Senate banking committee prepares to release a draft of a comprehensive reform bill as early as this week, Dodd has repeatedly conceded to his Republican counterparts on key issues, almost guaranteeing that the Senate's measure will be far more lenient on the banking industry than the legislation the House passed in December... Dodd's willingness to appease Republicans like Sen. Bob Corker (R-Tenn.), the main GOP negotiating partner, and Sen. Richard Shelby (R-Ala.), the banking committee's ranking member, has disappointed Dodd's fellow Democrats and reform advocates who urge a tougher crackdown."
Whither the CFPA?
Dodd's latest GOP compromise is part of a bigger problem: The Democrats have mishandled financial reform. As Nomi Prins writes for AlterNet, "Dodd's latest effort at creating a new Consumer Financial Protection Agency would render the regulator utterly powerless, but it's not the only issue Democrats appear willing to sacrifice to Wall Street campaign contributions. Right now, just about every other major element of the so-called Wall Street overhaul seems headed for disaster."
Although the establishment of the CFPA has been fiercely opposed by the banks and Republicans, it has widespread approval among progressives and the general public. So why has Dodd apparently abandoned it through compromise? Maybe because he's following the lead of his fellow Democrats. Prins notes: "Since June, we've been waiting to see whether Democrats had the spine to make sure the final agency would actually do something, or quietly gut reform with a barrage of loopholes."
There's still time for Dodd to push real reform before he retires. Or, like Prin says, he could "continue to wimp out for Wall Street, pull a Robert Rubin and secure a cushy job in banking come 2011. The next few months will indicate whether Dodd cares more about his legacy than his wallet."
Solis a 'bright spot'
But maybe there is hope. Department of Labor Secretary Hilda Solis has made considerable progress, as Mark Engler emphasizes for Yes! magazine. Engler calls Obama's Labor appointment a "bright spot" in the administration's first year—a move "that illustrate[s] the difference that a progressive-minded administration can make when it stands up to corporate interests and is unafraid to act in the public good."
"Under the Bush administration’s Department of Labor, the crisis of wage theft was summarily ignored. In March 2009, the Government Accountability Office issued a report saying that the department’s Wage and Hour Division had for years 'left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn.' Secretary Solis made reversing this trend a defining initiative of her department. Even before the report had been released, she had commenced the hiring of 150 new field investigators to enforce wage and child labor laws, as well as 100 more to police government contractors working on stimulus programs."
As Engler argues, officials would do well to follow the lead of Secretary Solis and demonstrate "what can be accomplished when regulators are encouraged to actually do their jobs—to fight for the interests of workers, for example—vigorously and creatively."
Buffet on banking
Finally, GRITtv's Laura Flanders reviews Warren Buffet's annual letter to shareholders, in which Buffet warns his clients that their financial advisers’ advice is skewed by the financial system. As Flanders notes:
"Ironically, just as Buffett's letter was being published, the man it'll take to make any agency happen -- Christopher Dodd -- is agreeing to defang the agency, strip it of independence and most prosecution power." Watch the video below.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
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