Stand Firm on Financial Reform

By Jon Bartholomew of Portland, Oregon. Jon is a policy advocate for OSPIRG.

It’s been about a year and a half since the crash of the global financial system that was brought on by deregulation and what have we done to prevent the next crash?

No significant financial system reforms have yet been enacted that will help consumers trust they aren’t being victimized by their banks and lenders. No significant reforms have been enacted that will stabilize the housing market. No significant reforms have been enacted that will ensure more stability of our entire economic system.

And for the last couple of weeks, Senator Dodd, Chair of the Senate Banking Committee has been trying to negotiate a bipartisan compromise that could water down proposed reforms until they are near meaningless. This is not what the American public needs or wants. In polling done just last month by Pew, Americans overwhelmingly support stricter regulations of financial institutions.

This is why I am pleased to see our Oregon Senator Merkley standing up for tough reforms and introducing a bill with Sen. Levin to curb risky trading by banks. This is exactly what we need – toughening up, not watering down of financial reforms. We should thank Sen. Merkley and then go further to call for Congress to beef up financial reform proposals.

The timing is critical. There are new reports that Sen. Dodd is going to back off his effort to get a bipartisan compromise, and propose something stronger. Now is the time to let all of our members of Congress know that we want consumers and taxpayers put before big banks. Check irresponsible financial practices with new rules and stronger, independent enforcement. We need a new strong, independent Consumer Financial Protection Agency.

We also need to cover all players and transactions. Rein in hedge funds and reckless investments that escaped regulations and traded without oversight on “shadow markets.” We must prevent financial institutions from becoming “too big to fail.” Banks shouldn’t be able to freely gamble with taxpayer money covering the bets. And we support greater oversight, accountability and democratization of the Federal Reserve.

These reforms are already way overdue, but there will be action in the next few days and weeks that give us the opportunity to make things the way they need to be for consumer protection and financial stability. Senator Merkley is showing he is willing to fight for good reforms, let’s show him he’s right to do so.

Comments

  • Bill Bodden (unverified)
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    "There are new reports that Sen. Dodd is going to back off his effort to get a bipartisan compromise, and propose something stronger."

    Dodd was, along with Barney Frank, Wall Street's point man on the bailout. If you want to know which way to go on this, check Dodd's route and go in the opposite direction. Good riddance to him. What's with those people in CT that they give us such specimens as Dodd and Lieberman?

  • JonB (unverified)
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    Well, Bill, that's exactly why we need to create a stink right now to get the Senate to toughen reforms. Dodd's move only means that things aren't going to get even MORE watered down.

  • Dave Rosenfeld (unverified)
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    Right on, Senator Merkley. This is a golden moment to give consumers some real leverage in the financial marketplace. Glad to know our Senator is leading the way, and showing the leaders how a leader should lead.

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    @Bill said, "check Dodd's route and go in the opposite direction."

    I don't know what that means. Right now, Dodd's direction was to call the question on "bipartisan" negotiations stalling and move an actual bill ahead. Our job now is, as Jon says, to make that bill as strong as possible, and force opponents, whether D or R, to stand up before the public and show whose side they're on: ours or the big banks, credit card companies, and mortgage lending industry.

    That means pushing hard for an independent Consumer Financial Protection Agency that is not controlled by the Federal Reserve or other agencies like the SEC, which did nothing to stop Bernie Madoff. Jeff Merkley has been a true leader, and we need to encourage the rest of the delegation to follow his suit.

  • Bill Bodden (unverified)
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    "@Bill said, "check Dodd's route and go in the opposite direction."

    "I don't know what that means. Right now, Dodd's direction was to call the question on "bipartisan" negotiations stalling and move an actual bill ahead."

    What that means, Dan, is to watch what Dodd does - NOT what he says. Surely, it is obvious by now the any call for "bi-partisanship" is a call for getting nowhere - or surrender by the Democrats to the Republicans.

    Just a refresher for what some people might consider ancient history, but back in January Dodd and Frank and their committees were trying to ram through the Wall Street bailout. They were crying the world would collapse if the bailout was not passed in the next couple of hours, so they could reject testimony from honest economists such as Joseph Stiglitz. Well the Republicans and courageous Democrats such as Peter DeFazio said they weren't buying that bullshit. The bailout wasn't passed for about three weeks, and when it was passed it was in a less reprehensible manner. And, while the global economy took a pounding the planet still continues to revolve on its axis.

    Dodd is looking for a new career, and he will make sure he does nothing to offend Wall Street so that he can continue to work for them.

  • Tex (unverified)
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    If you think Madoff ran a huge scam, Amway has ripped off millions of people for several decades, to the tune of 10s of billions of dollars:

    Amway is a scam, and here's why: Amway pays out as little money as they can get away with, so they support the higher level IBOs ripping off their downline via the tool scam.

    As a result, about 99% of IBOs operate at a net loss, while the top 1% make several TIMES more from their Amway tool scam than from the Amway products. This was made illegal in the UK in 2008, but our FTC is unable to pull their heads out of their butts to stop it here.

    Read about it on my blog, I suggest you start here: http://tiny.cc/D5oJh and forward the information to everyone you know, so they don't get scammed.

  • Bill Bodden (unverified)
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    "IBOs operate at a net loss, while the top 1% make several TIMES more from their Amway tool scam than from the Amway products. This was made illegal in the UK in 2008, but our FTC is unable to pull their heads out of their butts to stop it here."

    Tex: This is the prevailing modus operandum of American capitalism. The difference between us and the Brits and Western Europeans is that the politicians representing the latter aren't bought to the same extent as American. There's a reason why someone once said that the U.S. capitol is the biggest and most expensive whorehouse in the world.

  • Bill Bodden (unverified)
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    "The difference between us and the Brits and Western Europeans is that the politicians representing the latter aren't bought to the same extent as American."

    See, for example, The German Finance Minister Needs To Confront Investment Banks

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    Joining Sen. Merkley we now have a surprising new champion for financial reform: Heidi Montag, star of The Hills. Watch her new video, Heidi Montag Says No to Plastic, Yes to the CFPA. Seriously.

  • Zarathustra (unverified)
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    I would add to Bill's points that one difference is consumer satisfaction. The systems may not be hugely better, but they have public support, generally. A case in point.

  • roger doger (unverified)
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    Looks like Cox and his anti-reform Teabaggers are going to protest the Multnomah Co. DNC on Sunday. What, do they just want their corporate cronies and wallstreet to continue to raid American's pocketbooks.

    These people are so bling--they must have run out of cheap beer and cigarettes:

    Special Event Sunday: "Demo at the Demo" on Sunday 14-Mar-2010 at 5:15 PM

    Help save the country from the deforming of health care. We're rallying outside the Democratic Party HQ, calling on President Obama to scrap his overreaching plan to socialize 1/6 of the economy and adopt real reform.

    There's ample street parking. We'll gather Sunday 3/14/2010 at 5:15 PM the corner of NE 9th and Everett, stretching along Everett towards 8th. Candidates and speakers to start at 5:30. We should be done by 6:15 at the latest.

    Time: March 14, 2010 from 5:15pm to 6:30pm

    Location: Outside the Democratic Party HQ in Multnomah County

    Street: 900 NE Everett St., Portland OR (Map)

    Event Type: demonstration (bring family-friendly signs, bring family, friends, and neighbors, and bring a happy positive attitude)

    Sponsored by: Tom Cox (member of ORP/AFP/912/OTP)

  • Bill Bodden (unverified)
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    "Help save the country from the deforming of health care. We're rallying outside the Democratic Party HQ, calling on President Obama to scrap his overreaching plan to socialize 1/6 of the economy and adopt real reform."

    And continue the Great American Tradition of 45,000 people dying each year of treatable illnesses because they lack health care coverage. And continue to leave millions of children without health care coverage during their important formative years.

    This isn't a political issue as the anti-reform crowd claims. It's a moral issue they fail.

  • Zarathustra (unverified)
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    This isn't a political issue as the anti-reform crowd claims. It's a moral issue they fail.

    Well put, sir. What is it about empire that seems to induce that ignorance? Slavery may have been poorly managed, but, being before the "great white fleet" era, no one said that it was a political, rather than a moral issue. Sure was handled politically, but who would have confused the two? That's how far we've sunk.

    Event Type: demonstration (bring family-friendly signs, bring family, friends, and neighbors, and bring a happy positive attitude)

    Oh, but they asked everybody to be nice. So, in the future, BO should look at the rudeness and intimidating behavior as being the personal actions of a minority with issues. I mean, we've been told that about this blog for years. We have the highest standards, we simply provide a forum, and we're not responsible for and shouldn't be tarred by the actions of link spammers, right wing trolls, agent provocateurs or the like. If that disclaimer works here, it should work for the TEA organizers. Of course, in both cases, it's horse hockey.

  • (Show?)

    We'll obviously know more tomorrow, but here are a couple of reports today about the bill Dodd is presenting:

    Dodd to Unveil a Broad Financial Overhaul Bill

    Dodd Bill to Toughen Stance Against Banks

    If accurate, the bill appears to reflect the kinds of compromises Dodd had offered in order to seek (in vain) votes from Republican members of the banking committee. For example, it subordinates consumer protection to bank profits (often euphemistically referred to as "safety and soundness"):

    "To address that objection, Mr. Dodd would allow the consumer agency’s rules to be overturned by a two-thirds vote of the new systemic risk council, or 6 of the 8 members."

    This would undermine the very purpose of the agency. As a colleague of mine recently put it, we want the FAA to worry about making sure the planes don't crash - not worrying about the airlines making a profit. We want the FDA to focus on safe drugs - not pharmaceutical company profits.

  • Terry Parker (unverified)
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    It is not only the banks that are victimizing the working class, but also state and local governments that keep excessively increasing taxes and fees to fund a social engineering agenda, The only cuts to budgets are reductions in the amount of the increases. . .

  • Bill Bodden (unverified)
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    This is from Dan's second link above:

    The biggest winner in the bill appears to be the Federal Reserve, which would see its powers expand considerably. Large financial companies, particularly big banks, could emerge as the biggest losers. They would face much higher scrutiny from bank supervisors and potentially face sanctions for violating consumer protection rules by an autonomous new division within the Fed.

    This is from an article - The Video That Will Put Geithner Behind Bars - on Alternet:

    "It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations...."

    This latter item and many others in the recent history of the federal reserve suggest giving that suspect entity more power is not the smartest thing for the national interest; however, it might be the latest and greatest favor Dodd can do for his friends in Wall Street.

  • (Show?)

    Yeah, the proposed location of the CFPA at the Fed is incredibly bizarre. It's hard to think of an institution that's trusted less at this point by a broader range of both right and left constituencies than the Fed. And, yes, the Valukas report certainly suggests that Lehman's actions in manipulating its balance sheet were criminal.

    The financial reform coalition has been insistent that the CFPA needs to be genuinely independent, and that the reforms need to have real teeth. Unlike the health care fight, where (and I know some will disagree) even the current weak bill does have major benefits (e.g., covering an additional 30 million low-income Americans), on the financial reform front a weak bill will be worse than no bill.

    As Elizabeth Warren recently put it: "My first choice is a strong consumer agency....My second choice is no agency at all and plenty of blood and teeth left on the floor."

  • Bill Bodden (unverified)
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    The indifference to national interests for political expendiency by the Obama administration and senior Democrats is having consequences beyond Wall Street so much so that the little but powerful Israeli right-wing tail continues to wag the American dog.

    After giving President Obama the finger when he asked for a curtailment of settlements Israel continued to show its contempt for the Obama administration with its latest insult, in this case to the Vice President. Contempt for Joe Biden is understandable, but what does it say when another nation shows disdain for the Vice President of the United States and treats him so contemptuously on the world stage? As a new article in The Independent (UK)- Obama has failed to bring peace to the Middle East - says, "But the Vice-President of the United States is entitled to diplomatic respect, if only ex officio. Mr Biden arrived in Israel to kick-start the peace process. Instead, his hosts kicked him. By announcing the latest batch of settlements, the Israelis were treating the Americans with contempt. Eighteenth-Century diplomats fought duels over lesser insults."

  • Bill Bodden (unverified)
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    On "60 Minutes" tonight, Steve Kroft interviewed Michael Lewis who wrote about the recent Wall Street debacle. Lewis said to the effect that the people running Wall Street are out of touch with the real world of ordinary people. Dodd and other politicians in Congress, Democrats and Republicans, who are in league with these Wall Street operators appear also to be out of touch or they don't care as long as whatever happens suits their political agenda.

  • (Show?)

    Americans for Financial Reform is briefing press now on the bill, and analysts have an interesting take on CFPA and the Fed: it appears that while the bill places the agency "in" the Fed, there are strong firewalls so that it is not really "under" the Fed. This is significantly more encouraging than earlier reports, though many details need to be analyzed further (and the potential veto by the council of regulators is still problematic).

  • JonB (unverified)
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    we're still analyzing the whole bill, but here are some initial thoughts and comments: http://bit.ly/ditHvP

  • Bill Bodden (unverified)
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    Think Progress has a posting on Dodd's bill - A Closer Look At Consumer Protections In Dodd’s Financial Reform Bill

    The article concludes with this update: President Obama said Dodd’s bill “provides a strong foundation to build a safer financial system,” and Treasury Secretary Tim Geithner called it a “strong bill.” If Geithner likes it, check it out thoroughly.

  • Bill Bodden (unverified)
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    "Last week, Senator Ted Kaufman (D., DE) gave a devastating speech in the Senate on “too big to fail” and all it entails. A long public silence from our political class was broken – and to great effect. Today’s Dodd reform proposals stand in pale comparison to the principles outlined by Senator Kaufman. And yes, DE stands for Delaware – corporate America has finally decided that its largest financial offspring are way out of line and must be reined in.

    "Today, the Senator has gone one better, putting many private criticisms of the financial sector – the kind you hear whispered with conviction on the Upper East Side and in Midtown – firmly and articulately on the public record in a Senate floor speech to be delivered (this link is to the press release; the speech is in a pdf attached to that – update: direct link to speech, which will be given tomorrow). He pulls no punches:

    “fraud and potential criminal conduct were at the heart of the financial crisis”"
    

    The rest of the article - this is blueoregon - is at Baseline Scenario, an excellent site for financial commentary.

  • Bill Bodden (unverified)
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    Correction: The rest of the article: Senator Kaufman: Fraud Still At The Heart Of Wall Street

  • (Show?)

    @Bill - while a bit "technical," Baseline Scenario is a great source. And note that in his current piece (Does Meaningful Financial Reform Have Any Chance?) on Dodds' bill, Simon Johnson singles out Merkley for praise:

    "Senator Jeff Merkley (on the committee) stands out as someone who both understands the issues and can craft the right message."

    And he's right about the potential significance of a floor fight on real principles.

  • Bill Bodden (unverified)
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    More questions about Dodd's bill from the Huffington Post Investigative Fund: In Details Of Dodd Bill, Some Loopholes And Unanswered Questions

    Re Jeff Merkley: I opposed Merkley because he was being promoted by Chuck Schumer. So far, I'm glad to say, that my concerns appear to not have been justified.

  • MBT walk women (unverified)
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    why? http://www.4umbtshoes.com/mbt-56-b0-MBT+walk+women.html

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