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Dodd Proposal to Give the Federal Reserve Consumer Protection Authority Would Create an Industry Lapdog, Not a Public Watchdog

From Politico:

House Financial Services Committee Chairman Barney Frank on Tuesday blasted a proposal floated by Senate negotiators to place a proposed consumer protection agency inside the Federal Reserve.

“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.”

A leaked proposal by Senate Banking Committee Chairman Chris Dodd to give consumer protection authority to the Federal Reserve Board in financial reform legislation would be a total capitulation to Wall Street lobbying, said Consumer Watchdog, and urged Senate committee members to insist on a strong independent consumer protection regulator or refuse to move a bill forward.

“Granting the Fed consumer protection authority would create a lapdog for Wall Street, not the watchdog consumers need. We can’t cross our fingers and hope the regulators whose failures caused the crisis in consumer lending will do a better job for the public next time around. That just isn’t believable to the millions of Americans who lost their homes and savings due to unscrupulous lending practices while regulators turned a blind eye because they were money-makers for the industry,” said Carmen Balber, Washington Director for Consumer Watchdog. “Americans would be worse off with the Fed in charge of consumer protection than they are today with no reform.”

The financial industry spent $437 million lobbying Congress in 2009, and gave $41 million to members of the Senate Banking committee over the last five years, according to a Consumer Watchdog analysis of data compiled by the Center for Responsive Politics. An independent Consumer Financial Protection Agency as proposed by President Obama has been a primary target of financial industry opposition.

“It’s time for Senator Dodd to stop negotiating with Senators who have dug into battle trenches with the big banks in their attempt to block any meaningful consumer protections, and move a bill that will give the rest of the Senate a chance to vote for Main Street and support real reform,” said Balber. “Those who stand in the way of Wall Street reform will answer to the millions back home who are struggling to hold onto their homes, jobs and savings because of the consumer lending abuses that caused the crash.”

An effective consumer financial regulator must have full authority to write and enforce new rules of the road for banks, and those rules cannot be subject to veto by existing banking regulators. These criteria must be met in order to protect Americans from ongoing lending abuses and the next financial meltdown, said Consumer Watchdog. At least three other “compromise” proposals were leaked from Senate Banking Committee negotiations in the last week that also failed to meet these standards.

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Why is President Obama willing to cave in to 4 Republican demands even if it doesn’t garner any Republican votes? It looks better? Is that reason enough?

The Washington Post has the story:

President Obama signaled Tuesday that he will embrace four Republican ideas on health-care, including a greater investment in medical malpractice tort reform…

In a letter to Congressional leaders, Obama said he is also “open” to increasing Medicaid reimbursements for doctors, stepping up efforts to combat fraud in the health-care system, and ensuring that people who buy insurance on so-called insurance exchanges could participate in Health Savings Accounts.

All were ideas raised by Republicans at the televised health summit held by the White House last week…

But the White House is hoping that by appearing willing to compromise in the face of unanimous opposition, the president will provide Democratic lawmakers with more ammunition against their Republican adversaries.

Ammunition for what battle? Re-election? This is going to help how? Getting it passed? Won’t help at all.

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Chris Healey urged Sam Caligiuri to get out of the Senate/Governor race. It was widely rumored that Tom Foley encouraged Caligiuri as well, perhaps with specific promises of financial support.

In fact, Sam Caligiuri has very little money. Of the 55K he had at year end, 37,500 came in during the last 15 – 20 days with virtually all of it coming from donors in common with Tom Foley:

Data Source

FLEISCHER, MICHAEL Donated to Sam 1000
FLEISCHER, MICHAEL Donated to Tom 2400
FLEISCHER, MICHAEL Donated to Sam 1000
FLEISCHER, MICHAEL P Donated to Tom 250
FOGEL, DAVID MR. Donated to Sam 2400
FOGEL, DAVID Donated to Tom 1000
FOLEY, THOMAS MR. Donated to Sam 175
FOLEY, THOMAS C JR Donated to Tom 4800
FOLEY, THOMAS MR. Donated to Sam 2225
FOLEY, THOMAS C JR Donated to Tom 4800
FOLEY, THOMAS MR. Donated to Sam 2400
FOLEY, THOMAS C JR Donated to Tom 4800
FRANTZ, ALLISON MRS. Donated to Sam 2200
FRANK, DANIEL Donated to Tom 500
FRANTZ, ALLISON MRS. Donated to Sam 2200
FRANTZ, L S Donated to Tom 4800
FRANTZ, ALLISON MRS. Donated to Sam 2400
FRANK, DANIEL Donated to Tom 500
FRANTZ, ALLISON MRS. Donated to Sam 2400
FRANTZ, L S Donated to Tom 4800
FRANTZ, L. SCOTT MR. Donated to Sam 2200
FRANK, DANIEL Donated to Tom 500
FRANTZ, L. SCOTT MR. Donated to Sam 2200
FRANTZ, L S Donated to Tom 4800
FRANTZ, L. SCOTT MR. Donated to Sam 2400
FRANK, DANIEL Donated to Tom 500
FRANTZ, L. SCOTT MR. Donated to Sam 2400
FRANTZ, L S Donated to Tom 4800
LEVY, STEVEN Donated to Sam 2400
LEVY, STEVE Donated to Tom 2400
MILLER, DONALD MR. Donated to Sam 2400
MILLER, DONALD Donated to Tom 4800
MILLER, DONALD MR. Donated to Sam 2400
MILLER, HENRY S Donated to Tom 2400
MILLER, DONALD MR. Donated to Sam 2400
MILLER, PRISCILLA Donated to Tom 4800
MILLER, HENRY S MR. Donated to Sam 995
MILLER, DONALD Donated to Tom 4800
MILLER, HENRY S MR. Donated to Sam 995
MILLER, HENRY S Donated to Tom 2400
MILLER, HENRY S MR. Donated to Sam 995
MILLER, PRISCILLA Donated to Tom 4800
MILLER, HENRY S MR. Donated to Sam 1405
MILLER, DONALD Donated to Tom 4800
MILLER, HENRY S MR. Donated to Sam 1405
MILLER, HENRY S Donated to Tom 2400
MILLER, HENRY S MR. Donated to Sam 1405
MILLER, PRISCILLA Donated to Tom 4800
ORTHWEIN, PETER MR. Donated to Sam 500
ORTHWEIN, PETER B Donated to Tom 1000
STAPLETON, CRAIG MR. Donated to Sam 1000
STAPLETON, CRAIG Donated to Tom 4800
STAPLETON, CRAIG MR. Donated to Sam 1000
STAPLETON, DOROTHY Donated to Tom 4800

This may be a coincidence, of course.

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The Courant:

Merrick Alpert is a political newcomer with a meager campaign chest and scant name recognition.

But the Democratic candidate for U.S. Senate tried to make the most of his big moment Monday night — a televised debate against the party establishment’s anointed candidate, state Attorney General Richard Blumenthal.

Alpert came out swinging, repeatedly tagging Blumenthal, a 20-year incumbent, as a “career politician” and accusing him of favoring “incrementalism” instead of bold and decisive action…

And that, in Alpert’s view, crystallizes the difference between him and the attorney general. More than any meat-and-potatoes public policy viewpoint, it’s a question of style: Alpert accused the attorney general of “incrementalism,” implying that such an approach is part of what’s wrong with Congress.

“You know, to me, incrementalism is not necessarily a dirty word,” Blumenthal said.

Afterward, Alpert answered reporters’ questions and provided spin. Blumenthal left for a campaign fundraiser in Fairfield County.

That last sentence provoked anger over at My Left Nutmeg. (See comments.)

The Day - with very interesting, mostly pro-Alpert comments.

Colin McEnroe – in a pro-Blumenthal mode!:

Memo to Blumenthal: You really can run on your record. Just don’t be such a simpering d-bag about it.

*
And a thorough summary of many more reactions from Rick Green.

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Senator Chris Dodd is caving on finance reform according to a report in the LA Times:

Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) is circulating a proposal that would scrap plans for a Consumer Financial Protection Agency, which Obama has touted as crucial to protecting consumers from predatory mortgages, credit cards and other products. He and administration officials say the agency is key to avoiding a repeat of the financial crisis that rocked the country in 2008.

In an attempt to lure the Republican votes needed to get a sweeping overhaul through the Senate, Dodd proposes to replace the controversial stand-alone agency with a less powerful Bureau of Financial Protection within the Treasury Department. The new bureau would take the power from the Federal Reserve to write rules to protect consumers in the financial marketplace. And the bureau would have expanded authority to write regulations that cover products issued by firms other than banks, such as mortgage brokers and payday lenders.

But the bureau would have far less authority than the agency proposed by Obama, which was included in the financial regulatory overhaul legislation that passed the House last December without a single Republican vote. Dodd’s move could help get a bill through the Senate but could create problems in the House, Rep. Barney Frank (D-Mass.) warned Monday.

Why are Republican votes needed? The Democratic caucus has a 59-41 majority in the Senate. If reconciliation is now on the table for health care, as it seems to be, why not for finance reform?

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Christine Stuart, Ct News Junkie – has the story (links added):

Longshot U.S. Senate candidate Merrick Alpert came out swinging Monday and at least appeared to have had frontrunner Attorney General Richard Blumenthal on the ropes during their first televised debate…

On healthcare, Alpert said he supports a Medicare for all or a single-payer system. In a single-payer system, everyone is covered because everyone pays into the system, thus lowering costs..

On the war in Afghanistan, Blumenthal said he wasn’t sure he’d be able to answer the question in two minutes because of the complexity of the issue. He said he supports President Barack Obama’s decision to increase the U.S. troop levels there, then draw them down again in 18 months. He then talked about how he’s attended every National Guard send-off and homecoming in the state.

Alpert came out strongly against the war, saying it’s not in “our national security interests.” He said he rather spend the estimated $4 billion a month in the United States, rather than spending it on a corrupt Afghani government…

CT Blogger, My Left Nutmeg, has the video.

Don Pesci at Connecticut Political Reporter requested and received some comments.

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Yesterday Governor Rell released a deficit reduction plan.

Statement of Governor Rell on New Deficit Mitigation Plan

“Connecticut faces a current budget deficit estimated by my office of Policy and Management at $503.9 million – a figure that is only likely to grow, in view of Connecticut and the nation’s agonizingly slow recovery from this economic downturn. This deficit must be eliminated now through swift and decisive action. We cannot afford to wait and hope or to count on future revenues that no one is certain we will collect.

“The plan I am proposing not only eliminates the current deficit but makes much-needed structural reforms that will improve our prospects for long-term recovery. If we do not act now, any short-term cuts we manage to make will be overwhelmed by the inexorable growth of state spending.

“These choices may not be easy – but they are necessary. These choices may not be pleasant – but they are crucial. These choices may not be politically popular – but they are the right choices to make.”

Reactions are coming in:

NED LAMONT STATEMENT ON RELL’S LATEST DEFICIT MITIGATION PRESS RELEASE

“There’s nothing ‘swift’ or ‘decisive’ about kicking the can down the road. Connecticut’s budget needs more than a few band-aids–we face multibillion deficits as far as the eye can see, we have nearly maxed out the state’s credit card, and now Governor Rell wants to raid the remainder of our Rainy Day fund even faster, draining $219 million that will put us even deeper in the hole.

“Rell refuses to make the tough choices our state needs – as governor, those are the first challenges I’ll tackle. I have already initiated a line-by-line, top-to-bottom review of the state budget so that on day one, I can begin squeezing out every last efficiency. Our next governor must call on everyone to make tough sacrifices and enact sweeping reforms that transform the way our government does business, restore our fiscal house to order, and ensure our children do not suffer an even worse crisis down the road.”

Mary Glassman Responds To Governor Rell’s Deficit Mitigation Plan

Governor M. Jodi Rell yesterday released her Deficit Mitigation Plan for Fiscal Year 2010. With less than 20% of her proposed cuts achieved through actual spending reductions, the remainder of the Governor’s $504 million so called “mitigation” is nothing more than delays in funding pensions and Medicaid plans, and moving rainy day funds.

Mary Glassman, who is exploring a run for Governor said “Once again Jodi Rell has shown her preference for passing the buck. It’s time Connecticut had a real leader who will instead say ‘the buck stops here.’”

“The very programs that we need to survive the fiscal crisis we’re in right now– economic development initiatives that create jobs; education and health programs; and youth programs that keep kids on the straight and narrow– are all on Governor Rell’s chopping block. Connecticut’s next governor will suffer the consequences of these ‘fund sweeps’ and delay tactics which shift liability beyond her time in office.”

“Our towns and cities, already under attack from this administration, would suffer even more under this scheme. The funding shell game she is playing cuts municipal aid and passes the burden to local taxpayers.”