Consumer Financial Protection Agency

Five Things Senator Elizabeth Warren Should Do Right Away

Beating the $5.5 million that the Money Industry spent against Harvard Law Professor Elizabeth Warren was the easy part.

Now Warren has to decide what she’s going to do in the U.S. Senate, where just a couple of years ago, powerful pro-Wall Street Democrats like Christopher Dodd and Treasury Secretary Geithner killed any chance that she’d be confirmed to head the new Consumer Financial Protection Bureau – possibly the most significant part of the post-2008 crash financial reform legislation. As they hoped, President Obama didn’t even bother to nominate her – even though the concept of a federal agency to protect consumers against Wall Street’s misdeeds was hers.

First, Warren has to choose what role she’ll play once she’s on the inside. Its members like to think of themselves as august and deliberative, but in fact the Senate is deeply dysfunctional and its Democratic leadership easily deterred from meaningful action by the mere threat of a filibuster. In a recent New York Times piece on the Senator-elect, you could easily spot the inside-the-Beltway types trying to crush expectations – Warren’s and ours.

Don’t dismiss the perils of the decision.

Official Washington wants Warren to play the game, wait her turn, not rock the boat and eventually win the respect and support of her “colleagues” – the traditional route to power, influence and effectiveness in the Senate. Or she can damn the torpedoes and go full speed ahead in support of popular consumer reforms, at the risk of angering and alienating those who might otherwise be her allies.

And don’t forget who her true opposition is: the multinational corporations and their Washington lobbyists, who supply senators with the cash they need to get elected. That’s what drove the American economy into a depression four years ago, as we explained in our report “Sold Out: How Washington and Wall Street Betrayed America.” (PDF) Thanks to the U.S. Supreme Court’s decision in Citizens United, they’re free to spend as much of it as they want to influence the democratic process.

Senator-elect Warren has already indicated which way she’s headed. “If the notion … is we’re going to elect somebody to the United States Senate so they can be the 100th least senior person in there and be polite, and somewhere in their fourth or fifth year do some bipartisan bill that nobody cares about, don’t vote for me,” she has said.

That’s precisely the right call. Warren is a deceptively disarming warrior – I called her “the lawyer with the dragon tattoo” a few years back. She’s got unique nerd-quality credentials, a national support base, and the close attention of the news media. Not since Ralph Nader drew nationwide attention to consumer health, safety and environmental issues in the 1970s has there been such a respected and resonant voice on consumer issues.

No one else in the Senate – or even the federal government, with the exceptions of the President and the Secretary of State – comes close. She can leverage her rock star status to propel a progressive agenda of reforms that will be so popular with the public that the other 99 will have little choice but to go along. Her leadership will prove particularly helpful to her fellow Democrats, who badly need to show that as a majority they can get something done for average Americans. The Congress and the country needs a lion in the Senate. That’s what they used to call Ted Kennedy, whose seat Warren will occupy. It’s poetic politics.

The next question for Warren will be what to work on. Here are five suggestions:

1. Bankruptcy reform. Warren, a bankruptcy expert, became widely known in the 1990s for her critique of the practices of America’s banks and credit card companies in law reviews and academic pieces. When the financial industry was lobbying Congress to make it harder for the average American to declare bankruptcy, Warren penned a landmark analysis (PDF) that concluded that most Americans sought bankruptcy protection not because they were freeloaders or deadbeats but because they could no longer afford to pay their medical bills. Unfortunately, Wall Street won, and the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” made it nearly impossible for beleaguered consumers to get a fresh start – a huge victory for the credit card industry that made sure repayment of plastic debt got higher priority than child support payments, for example. Warren should investigate the inequities of the 2005 law and then seek corrective amendments.

2. Lower credit card interest rates. Having bailed out the banking industry, Congress was under pressure to do something about credit card abuses. The “Credit Card Act of 2009” was the deeply compromised and flawed result – read our analysis here. Missing, especially, was a cap on credit card interest rates. While consumers are struggling to cover their mortgages, and pay down credit card debt at 20-30% interest rates, the banks and credit card companies get to borrow taxpayer money – our money – from the Federal Reserve at nearly 0% interest rates. That needs to be fixed, and if it is: imagine the stimulus effect on the U.S. economy.

3. Fix the Senate filibuster rule. The filibuster used to be a powerful tool for a minority of members of the Senate to take on the majority: Senators could block a vote on a bill by speaking on the floor of the Senate until they dropped... or sixty Senators voted to shut down the filibuster. Unfortunately, this extraordinary measure, once rarely invoked, has devolved. Under the current practice, a Senator need only threaten a filibuster to block a vote. It’s been used hundreds of times since 2006 by Senate Republicans to derail action on important bills and judicial appointments. Warren has already pledged to revise the filibuster rule when the Senate convenes in January. As she points out, preventing abuse of the filibuster is necessary if the Senate is going to move forward to address the nation’s most pressing problems.

4. Speak out every week. Lawmaking is just one role of a U.S. Senator. Another is to use the power and influence of the position to investigate and highlight problems in and outside of government. Wisconsin Senator William Proxmire did just that in the 1970s and 1980s through what he called “The Golden Fleece Award,” which he presented monthly to public officials who, he believed, were wasting taxpayer money. Proxmire’s pronouncements, which both amused and maddened taxpayers, were closely followed by the news media. Warren should initiate a weekly tradition of calling out waste, inefficiency, and corruption, wherever it is found.

5. Restore the First Amendment to Human Beings. According to five members of the U.S. Supreme Court, the right of corporations to spend money to influence elections, and to give money and gifts to politicians for the purpose of influencing their votes, is protected by the First Amendment and cannot be limited or regulated. That’s the infamous ruling in Citizens United v. Federal Election Commission. The Supreme Court’s decision has unleashed a tidal wave of corporate money, often undisclosed, into our elections, one that has drowned out the voices of average Americans and turned our country into an aristocracy in which the People are taxed for the benefit of the powerful elites that run Wall Street and Washington. A grassroots campaign is underway to enact a Constitutional Amendment specifying that, “the protections of the First Amendment that apply to the spending of money on lobbying and elections, whether by contributions, expenditures or otherwise, shall extend only to human beings.” Senator Warren should be one of the leaders of that crucial reform.

Consumer Protection Only Wall Street Could Love

When it comes to finding someone to head the Financial Consumer Protection Bureau that opened its doors this week, the Republicans remind me of that Groucho Marx bit: “Whoever it is, we’re against them.”

The Republicans have a pretty straightforward position: they’ve made it clear they’ll only be satisfied with one kind of financial consumer protection agency: one that’s dead, buried and incapable of causing the big banks any trouble.

Meanwhile, President Obama is caught between his promises to create a powerful new agency to rein in Wall Street and his need to raise $1 billion to fuel his reelection campaign.

So the president dissd the highly articulate Elizabeth Warren, who came up with the idea for the new agency and who has been a down-to-earth, no-nonsense advocate for consumers for decades, in favor of the former Ohio attorney general, Richard Cordray.

Republicans don’t like Cordray, who enjoys a decent enough reputation any more than they liked Warren. Obama could have waged a political popular fight in favor of Warren and real protection but he didn’t.

How come? On the one hand President Obama would prefer not like to see one of the signature achievements of his financial reform effort strangled in its crib.

On the other hand Wall Street doesn’t like even the whiff of anybody implying that the bankers might take advantage of their customers let alone anybody actually trying to do something about it.

Based on his weak negotiating efforts so far, Obama and the Democrats are perfectly capable of accepting some form of the proposal offered by Sen. Jim Moran, R- Kansas, which would turn the real power over the CFPB to a committee, preserving consumer protection in name only. Obama and the Democrats can run on that with the same gusto the president is pretending that the faux financial reform actually reined the Wall Street fraud and excess that led to the 2008 financial collapse and bailout.

Democrats and Republicans are competing hard, less for the affections of voters and more for the mountains of cash beckoning to them from Wall Street and corporate coffers.

In calculating whether to keep their promise to protect consumers or whether to bend to Wall Street, the president and the Democrats know that the Democratic voters have no other place to go right now; they are unlikely to swing to the “We’re against it” party even as much as Obama disappoints them

But Obama and the Democrats know Wall Street, which was generous to them in 2008, does have a choice. The Republicans are wooing Wall Street hard, though the Republicans’ knuckleheaded stance on the debt ceiling makes them look more like surly juvenile delinquents than a party with an interest in actually governing.

Time will tell whether the Democrats or the Republicans will actually allow the new agency to do real consumer protection or if they will thwart the majority’s will in favor of Wall Street’s.

Around the Web / Consumer Financial Protection Agency / Martin Column / President Barack Obama - 07/23/2011

While Country Suffers, Politicians Rake it in

While our politicians tell us the country is broke, they themselves are doing fine.

In the midst of debt ceiling hysteria, President Obama and the Democrats bragged they’d raised an eye-popping $86 million so far for his presidential campaign.

The various Republican candidates who have reported their cash have raised about $35 million so far, but it’s early yet.

Meanwhile the Republicans oppose any revenue-raising or loophole-closing that would be favored by a majority of Americans. Republicans continue to insist that increased taxes on the wealthiest would be job-killers, even though there’s no evidence to support their position.

For his part, President Obama, in an effort to appease Republicans, offered up a variety of cuts to Social Security and Medicaid that would be opposed by a majority of Americans.

Cutting services for those that need it most is what Obama calls “shared sacrifice,” though no one who could actually afford it is actually being asked to make any sacrifices.

As to the major challenges facing the nonrich – joblessness and foreclosure – those are beyong the skill and imagination of our leaders to grapple with.

The Republican strategy seems to be standing pat in the belief that the president will eventually cave in.

The president’s strategy appears to be to tie the aged, poor and vulnerable to the train tracks and then blame the Republicans when the train runs them over.

President Obama’s campaign manager, Jim Messina, was proud that most of the $86 million was coming from small donors. I don’t doubt that a big chunk of that money comes from people who are justifiably scared stiff of turning the country back over to the Republicans, who never complained about the deficits when the previous occupant of the White House when he was running them up.

I understand the big donors. They get access and influence. But do the small donors have any influence? Do these small donors really believe that having the aged and infirm give up a chunk of their security amounts to sharing sacrifice? Can they make their voices heard along with their $5 donations? Or do they just have to go along with the president and the Democrats and whatever deal they make?

On Saturday morning we got news that the president would not appoint the stalwart consumer advocate to head the agency she dreamed up to protect financial consumers, and which she has been working to set up.

I wonder whose interests the president was thinking about when he made that decision – his Wall Street and corporate donors or those small donors his campaign manager was bragging about?

Congress / Consumer Financial Protection Agency / Martin Column / President Barack Obama - 07/16/2011

“If We Build It, He Will Come”

Washington has become Wall Street’s “field of dreams.” There, the money conglomerates engage in their beloved sport of financial speculation, cheered on by a small but powerful group of public officials who have sold out the rest of the country.

Deregulation was a home run for the financial industry. Wall Street’s friends in Washington sacked the rules of the game, unleashing the hedge funds, banks, investment firms, insurance companies and other speculators who made billions before the crash, then got billions more from the taxpayers after the crash.

Meanwhile, as today’s New York Times points out, almost nothing has been done about “derivatives,” the virtual technology for the speculation that drove our economy into the dugout three years ago. Federal agencies that were supposed to issue new regulations to prevent another debacle have been tied up in knots by Wall Street lawyers.

Jobless and fearful for their kids’ future, people are furious about what happened. But it was always going to be a daunting task to mobilize the public behind the necessary reforms when they are so complex, and anything drafted to appeal to directly to Americans’ wallets – say, by providing a cap on credit card interest rates, or low-rate mortgages, or other forms of financial relief – would have inspired the financial industry to retaliate with nuclear weapons. Neither the President nor anyone in Congress were willing to start that fight, principled as it would have been.

So it has all come down to Elizabeth Warren, the brainiac Harvard law professor who suggested, in a law review article in 2005, that Congress create a new federal agency with the mission of protecting consumers against false advertising, misleading contracts and the general thievery of the financial industry. Democrats proposed the agency as part of the Wall Street reform legislation in 2009, and after the industry thought they had whittled it down to something they could easily live with – or simply get around – Congress created the Consumer Financial Protection Bureau and the President signed it.

Warren was the obvious person for the job, and almost immediately Americans began calling on President Obama to nominate her for the post.

What Wall Street didn’t realize at first is that it is way, way easier for Americans to get behind a human being than a thousand-page piece of legislation that has been lawyered and lobbied into mush. America has become a celebrity-driven culture, and while Elizabeth Warren is no Lady Gaga, she is one of a small number of outsiders that have occasionally busted up the D.C. establishment – just as Ralph Nader did in the 1970s, and Jimmy Stewart fictionally did in the Frank Capra movie “Mr. Smith Goes to Washington.”

Whether President Obama will nominate Warren to the position has become the defining question of his Presidency for millions of Americans, especially those who voted for "change we can believe in" in 2008.

When confronted with demands by civil rights leaders to take action against racial discrimination in the late 1930s, President Franklin Roosevelt’s legendary retort was “make me do it.” Whether he ever said that, the strategy he suggested is literally page one of the best manual for citizen empowerment and political organizing.

Let’s put it in more contemporary terms. President Obama has made it clear he doesn’t want to nominate Warren. It’s just another fight he’d rather not have. He embraces consensus, not controversy.

But the President has to know she’s the best person for the job. So the burden is on Americans to make it impossible for him not to nominate her. Part of that means punishing the people who are working against her – members of Congress, and those in the Administration – because they are doing Wall Street’s dirty work. These are the same people who let Wall Street plunder our nation and then bailed Wall Street out with our money.

My guess is, we can make Obama do it.

Consumer Financial Protection Agency / Harvey Column / Outrage / President Barack Obama / Uncategorized - 06/22/2011

Missing the Message

It’s absolutely clear that the Republicans mean to work with the big banks to block any financial reform, no matter how watered down, by any political means necessary.

The Republicans have opposed the president’s nominees in committee. As far as the Consumer Financial Protection Agency, they oppose not only the popular consumer champion Elizabeth Warren to be its chief, they will oppose anyone President Obama nominates. The Republicans have made their intentions clear – they want to gut the agency before it’s born.

Meanwhile the bank lobbyists have gone to work on the regulators who are writing the actual rules to implement last year’s financial reforms, and have effectively stalled the process in its tracks.

To make sure that no one is missing the message, J.P. Morgan Chase chief Jamie Dimon went on the offensive this week, publicly stating that excessive financial regulation was weakening the economic recovery. Without offering specifics, Dimon told Fed chair Ben Bernanke at a bankers’ conference, “I have a great fear someone’s going to try to write a book in 20 years, and the book is going to talk about all the things that we did in the middle of the crisis to actually slow down recovery.”

While the bankers have been working feverishly behind the scenes to further water down the weak Dodd-Frank version of financial reform, Dimon’s statements are the most aggressive public challenge yet to any attempts to rein in the big banks.

What’s unclear is why the president is not meeting this assault on one of his proudest achievements (Wall Street reform) head on, despite the Republicans’ and bankers’ clear signals that they have no intention to compromise. Rather than mounting a strong public case for Warren, for example, the White House continues to float alternative, less qualified, nominees. Obama seems to be laboring under the illusion that there is somebody else who satisfy the Republicans. What’s baffling is that he has no reason to think so: the Republicans haven’t exactly been ambiguous. The bankers are also taking off the gloves, with only a few lonely voices in Washington to make the case for stronger reform.

When will our president get the message?

Around the Web / Consumer Financial Protection Agency / Financial Reform Legislation / Martin Column / President Barack Obama - 06/10/2011

3 Steps Toward Real Economic Recovery

Democrats should be less worried less about Sarah Palin’s mangling of American history and more concerned about the Obama administration’s consistent underestimation of the recession since the financial collapse.

The president and his team has been downplaying the seriousness of the jobs and housing crises since they took office, repeatedly taking inadequate steps to address the twin fiascoes of foreclosure and unemployment, while wrongly conceding to Republicans that the political focus should be the short-term deficit.

This is not only bad for the country but bad politics for the Democrats, increasing the chances that voters will blame them for not fighting harder for programs to create jobs and straighten out the housing mess. Never mind that Republican efforts to address these issues amount to less than zero.

Nobody expects the president and his party to win every fight. But we do expect him not to wave the white flag before the fight starts.

Circumstances still offer the president opportunities to show that he finally gets it – and to signal a more aggressive approach.

First, the president can launch a fight for Elizabeth Warren to head the Consumer Financial Protection Agency. Warren is popular, articulate and sensible, and the agency was her idea in the first place. Of course the Republicans hate her, in fact they don’t want a single head of the agency. Republicans favor a committee to run the agency, the more easily for the banks to bamboozle it.

Second, he can replace his outgoing economic adviser, Austan Goolsbee with somebody more tuned in to the jobs and housing crises. How bad was Goolsbee (and the administration’s economic policies he defended)?

Here’s how economist Firedoglake blogger Scarecrow put it after listening to Goolsbee Sunday, saying it was up to the private sector to create jobs now because government could do nothing: “If I’d been asleep for the last decade and woke up to ABC This Week’s interview of Presidential economic advisor Austan Goolsbee, I would assume that Mitt Romney won the 2008 election, that he was predictably following Republican dogma about how to recover from a severe financial collapse and recession...” Scarecrow wrote.

With Democrats like these, who needs Republicans?

Third, Obama can fire his Treasury secretary, Timothy Geithner, who has shamelessly pandered to his banker cronies while ignoring Main Street’s woes since he helped engineer the bailout as head of the New York Fed prior to the Obama administration.

Of course it will take more than gestures and a few appointments for the president to tackle the continuing severe economic challenges we face. But he can still saddle up and take a brave ride on the right side of history, if he chooses.

Consumer Financial Protection Agency / Martin Column / President Barack Obama - 06/06/2011

Remind AGs Who They Work For

The big banks are headed to Washington D.C. in an effort to weaken any potential settlement stemming from complaints about the banks’ misbehavior in the foreclosure crisis.

Those of us who favor holding the banks accountable are taking a different route Tuesday – through the country’s 50 state capitals.

A coalition of homeowner and consumer advocates are encouraging people to contact their state attorney generals today in an effort to encourage them to conduct real robust investigations into the big banks’ foreclosure fraud, not just go through the motions.

The official response to disclosures of the big banks’ sloppiness and downright fraud in the foreclosure process has been a mishmosh. President Obama refused to declare a moratorium while the mess was sorted out; the state attorney generals promised a tough investigation but don’t appear to have followed through, and then the various federal bank regulators got involved in an effort to negotiate a settlement.

One strategy for the big banks and their Republican allies has been to demonize Elizabeth Warren, a strong homeowners’ advocate who has been working to set up the Consumer Financial Protection Bureau, which was created as part of the financial reform package passed last year. While the CFPB doesn’t exist yet, Warren has apparently been involved in the settlement process because that agency will have a hand in enforcing a settlement.

At the national level, it’s not just the Republicans that are covering for the bankers. The Obama administration in its present mood of bank coziness hasn’t been inclined to either prosecute bankers for violating the law or drive a hard bargain with them.

So that leaves it up to the attorneys general, several of whom, including Illinois’ Lisa Madigan, Iowa’s Tom Miller and California’s new attorney general have promised tough stances in protecting homeowners and holding banks accountable. Which means it’s up to us to call them – today – and remind them to hang tough.

Consumer Financial Protection Agency / Foreclosure / Martin Column - 03/28/2011

Phony Moderates, Real Power

Beware wolves dressed in moderates’ clothing.

Especially the “fresh thinking” as gussied up by the group calling itself “Third Way,” which tries to put a genteel, highbrow facade on its advocacy for increasing austerity and financial insecurity for the majority of Americans.

Digging beneath the sunny platitudes about promoting growth, you will find that the organization is chock full of high finance types and their political servants, so it’s no surprise that they’re more interested in rethinking what they like to belittle as entitlements and boosting too big-to fail banks than they are in raising questions about the financial system.

And they’re not laying down these proposals just to hear themselves talk.

These people have real power to set the terms of the debate and strongly influence decision-makers.

The most obvious example is President Obama’s new chief of staff, Bill Daley, the former top official of J.P. Morgan who sits on Third Way’s board.

He’s just the latest in a string of bad appointments the president has made to oversee the nation's economy, from Tim Geithner and Larry Summers to Gene Sperling, the Goldman-Sachs alum who fought for financial deregulation in the Clinton White House, who was recently appointed to replace Summers on the Council of Economic Advisers. Then there's Jeffrey Immelt, GE’s CEO the outsourcing, plant-shutting ace who Obama put in charge of reducing the unemployment rate.

For his part, Daley seems to have earned his job as the president’s chief adviser by fighting against financial reform, especially from the Consumer Financial Protection Bureau.

The mainstream media has worked hard to foster the idea of centrism, with Third Way as a prime proponent of “moderate ideas.”

But there’s nothing moderate about the continuing unhealthy influence of corporate America over our political process, fostering policies that are turning us into something more like a Third World country polarized between haves and have nots than the land of opportunity for all.

There’s nothing moderate about the fear-driven wealth and power grab, otherwise known as the federal bailout, that entrenched the wealth built for a select few in the years of the bubble economy, while it increased economic insecurity for the rest of us. As Neil Barofsky, TARP’s inspector-general, pointed out in his most recent report, it also entrenched the political and financial clout of “too big to fail” financial institutions.

There’s nothing moderate about the austerity agenda of shared sacrifice which consists of cuts to Social Security, Medicare and education.

There’s nothing moderate about the attack on the economic system that was built in the wake of the Great Depression and World War II, which combined the power of the free market with a system of regulation and safety nets. That attack, with its intellectual underpinnings in the work of the economist Milton Friedman, was launched in the 1980s and has been carried forward by politicians of both parties.

Meanwhile, two of the most impassioned politicians standing up to that attack, from opposite ends of the spectrum, would probably be characterized by the mainstream media as extremist: Sen. Bernie Sanders, the independent socialist from Vermont, and Rep. Ron Paul, the libertarian from Texas. Those two men, who would probably find much to disagree on, worked together to pass a bill to audit the highly secretive activities of the Federal Reserve during the bailout.

You may or may not agree with Sanders or Paul either, but they aren’t afraid to challenge a status quo which props up the powerful while undermining the powerless.

You can scour Third Way’s materials and you won’t find anything that challenges the risky practices of financial institutions that wrecked our economy. You won’t find anything that challenges the power equation that props up the status quo. Behind its rhetoric of moderation, Third Way knows which side it’s on.

Consumer Financial Protection Agency / Financial Reform Legislation / President Barack Obama - 02/08/2011

Elizabeth Warren's Inside Move

So President Obama did not appoint bailout critic and middle-class champion Elizabeth Warren to head the new Consumer Financial Protection Agency.

He did appoint her to an important-sounding post as a White House adviser with responsibility to set up the agency, which after all was her idea in the first place.

Is the president actually marginalizing her with the window dressing of a fancy title? Or will she have a meaningful role in setting up the agency and shaping policy?

The punditocracy has gone into overdrive analyzing the president’s handling of Warren.

The positive spin is that it’s a savvy political move on Obama’s part to get her to work right away creating the agency and avoid a Republican filibuster, and that the president will finally be hearing from an insider not under Wall Street’s spell.

The more skeptical interpretation sees it as the latest example of the president’s failure to push back against Wall Street on issues that Wall Street cares about. As he has in the past, rather than picking a principled fight with Wall Street (and Republicans) Obama found a way around it.

The third spin, from Barney Frank, is that Warren actually didn’t want a permanent appointment now, keeping her options open to either exit the administration or accept the job later.

Writing on WheresOurMoney.org earlier, Harvey Rosenfield, eloquently described why Warren is the best person to lead the new agency.

Warren has been a long-time critic of predatory lending practices and the American way of debt. In her role as congressional monitor of the federal bank bailout she’s been a fearless straight shooter and a down-to-earth demystifier of the complexities and foibles of high finance.

But Obama’s handling of her appointment reinforces the impression that he’s weak in the face of Wall Street’s power. Why in the world, with a high-stakes election less than 2 months away, would the president want to avoid a fight with Wall Street and Republicans on behalf of the undisputed champion of the middle-class and consumers? If the president does intend to appoint Warren to head the agency later, does he seriously think it will be easier later?

Unlike most of the president’s other top economic advisers, Warren has never been cozy with Wall Street. But it’s simply not realistic to expect the president is about to get more aggressive in reining in the big banks with Warren on the inside.

The president has shown that he is capable of ignoring perfectly good advice from well-respected advisers with impressive job titles within his administration. Remember Paul Volcker? The former Fed adviser has been a lonely voice within the Obama administration warning about the continuing dangers of the too big to fail banks and too much risky business in the financial system. But the president used Volcker as little more than a populist prop, preferring the more conciliatory approach championed by his other top economic adviser, Larry Summers, Treasury Secretary Tim Geithner and Fed president Ben Bernanke. These three effectively fought off the tougher aspects of financial regulation at the same they time touted themselves as real reformers. While the president made clear Warren will work directly for him, will she be able to match Summers, Geithner and Bernanke, all seasoned bureaucratic infighters? She’s done little to endear herself to them and has publicly tangled with Geithner.

There’s no question that Warren, a Harvard bankruptcy law professor, has already played an extraordinary and important role in helping understand the financial collapse and its fallout. She’s never been anything but forthright, no-nonsense, principled, unafraid to speak truth to financial power and to demand accountability. She will need all those qualities as well as thick skin and nerves of steel for her new job. The stakes are high. I wish her well.

Consumer Financial Protection Agency / Martin Column / Paul Volcker / President Barack Obama - 09/17/2010

Soldiers Lose Out to Yo-Yos

Here’s a snapshot that puts into sharp focus where we are politically this summer:

In a showdown between the U.S. military and the nation’s car dealers over protecting soldiers from predatory lending, the car dealers won.

Even though the commander-in-chief said he wanted the fighting men and women to be shielded by the proposed new consumer protection agency when they went to get a car loan, congressional Democrats Tuesday sided with the car dealers, who would prefer not to face any additional regulation, thank you very much.

After all, they argue, we didn’t cause the financial meltdown, so leave us alone. But according to the Better Business Bureau, new car dealers rank fifth in complaints about lending practices. Used car dealers do a little better; they rank seventh.

The military says its soldiers, focused as they should be on other matters, are particularly vulnerable to predatory lending.

Rosemary Shahan, president of a Sacramento-based nonprofit, Consumers For Auto Reliability and Safety, told the Chicago Tribune that auto dealers pack financing contracts with costly items such as extended warranties and insurance to cover loan payments if the vehicle is wrecked.

One of the more obnoxious forms of predatory lending is something called a yoyo loan. The buyer is told they can drive the car off the lot with a deal they can’t refuse – subject to loan approval. Then the dealer calls back and tells the buyer the initial loan wasn’t approved but they can have the vehicle at a higher interest rate.

The car dealers argue that they’re already subject to other forms of regulation. But they also have other means of persuasion: the National Association of Auto Dealers is among the elite top 20 campaign contributors since 1989, according to the Center For Responsive Politics, with more than $25 million in contributions. During 2009 and the first quarter of 2010, the National Automobile Dealers Association and another group that represents foreign-car franchises, the American International Automobile Dealers Association spent almost $3.5 million to lobby on financial reform and other issues, the Center For Public Integrity reported.

Call President Obama and let him know we need him on the front lines in the battle against predatory lending.

Consumer Financial Protection Agency / Financial Reform Legislation / Martin Column - 06/22/2010