I Smell a Rat on Capitol Hill

If you are wondering why the United States Congress has approval ratings that hover somewhere between pond scum and avian flu might take a look at the September 6th Senate Banking Committee hearing on the nomination of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau.

This is a truly important event and an even more important issue and it got lost in the shuffle last week and this past week as the media focused primarily on President Obama’s jobs speech and the tenth anniversary of 9/11.

At a time in our history when millions of Americans are struggling and so many of us are convinced that the financial system operates solely for the benefit of the rich and works simultaneously against the interest of working folk, this hearing was an opportunity for the United States Senate to demonstrate that despite all of the rhetoric, they are in fact, concerned about the plight of the ordinary American family. What we got however, was more of the same—partisanship and a shameless and shrill continuation of a tendency to destroy anything that has its origins in the White House.

Cordray, who is a strong consumer advocate with an irreproachable reputation, came across as reasonable, calm and distinguished, but few on the committee demonstrated much interest in speaking with him. The Democratic committee members seemed to focus on making the Republicans look like unreasonable and obstructionist front men for Wall Street while the few Republicans who did speak, did their level best to live up to that image.

The ranking Republican on the committee, Senator Richard Shelby (R-Ala), disreputably ignored the nominee and screamed ridiculous demands that the entire structure of the Consumer Financial Protection Bureau (CFPB) be re-designed before Cordray or any other nominee could even be considered. He went so far as to referring to the hearing as “premature,” despite the fact that the law establishing the Bureau was passed over a year ago after months of bipartisan negotiations.

And that was the best thing that happened. In a statement that Time Magazine called “one of the silliest” of the hearing, Shelby claimed, “The Director will be virtually free of any constraints on his authority,” insisting, “It’s only a matter of time before this concentration of power is abused or misused.”

You kidding? No constraints? Really? Call me crazy but the following statutory provisions sure look like constraints to me:

1. The President can remove the CFPB Director for cause anytime

2. Before issuing rules barring deceptive or unfair practices or simply administering federal financial laws, CFPB is required to consult with other regulatory agencies

3. The Financial Stability Oversight Council can overrule any CFPB rule that it believes would interfere with the “safety or soundness” of the financial system. There is no other federal regulatory body that can have its rules overridden by other regulators.

4. CFPB’s Director must testify before each House of Congress twice a year and make detailed, written reports regarding its budget, rules it has adopted and enforcement actions

5.CFPB’s budget is capped by law. Again, this is a limitation that applies to no other regulatory body

6. The Bureau is required to do a cost benefits analysis of all proposed regulations and give small businesses an advance look at draft rules. It must evaluate all increases in credit costs for small entities and consider alternatives that would minimize those costs

I have provided you with just six limitations and of course, that barely scratches the surface. A much more detailed description of the constraints, checks and balances that apply to CFPB has been put together by the Consumer Federation of America—the source of the six above named limitations.

While couched in fine words like “accountability” and “transparency,” what Shelby and some of his colleagues are up to is a blatant attempt to avoid effective regulation of the financial industry. They cry crocodile tears over hamstringing economic recovery through regulatory action while totally ignoring the fact that it was the failure of the old regulatory system that enabled the unbridled speculation and predatory lending that destroyed our economy to begin with.

Once again, it appears that some Senators think they work for the denizens of Wall Street as opposed to the citizens who elected them to office. A true manifestation of that sentiment can be found in the words of Shelby’s counterpart in the House, Financial Service Committee Chair Spencer Bachus, who last year was quoted in the Birmingham News, “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

There is one way and only one way to break this gridlock. We have to raise Cain. We need to call our United States Senators in sufficient numbers to jam their phone lines, and demand that they confirm Richard Cordray immediately and that any attempt to minimize or water down the Consumer Financial Protection Bureau will not be tolerated. And we need to do that today.

Author’s Note: Many of you have been asking about the condition of our sister-in-law who was so brutally wounded during an argument over a neighborhood parking space. You should all know on Tuesday afternoon, she walked through the front door of her home and there was an immediate impromptu party that took place on her block. She has a ways to go with rehab, but she is firmly on the road to recovery. Thank you all for your well wishes and prayers. It all worked.