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This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project.  I am a Fellow with CAF.

In the last several years we have all been fleeced, looted, robbed, swindled, thieved, tricked, cheated, scammed, exploited, ponzied, stung, conned, extorted, ripped off and bankrupted by the banks and other big financial companies.  Finally the Congress is working on reigning them in.   This week the Congress takes up whether to create a new Consumer Financial Protection Agency (CFPA).  This is a very important bill, creating an analog to the Food and Drug Administration (FDA) and the Consumer Product Safety Commission (CPSC), designed to protect consumers from financial scams and general fleecing.  

I was on a blogger call today with Elizabeth Warren to discuss this bill.  This call was hosted by Heather Booth, Americans for Financial Reform, a coalition of 200 organizations fighting for this other reforms of our banking and financial system.  Warren is Chair of the Congressional Oversight Panel - COP - but was not on the call in that capacity.  She was on the call to explain why we need the CFPA.  Warren originally proposed the idea of a CFPA, and you might know her from Michael Moore's movie, Capitalism: A Love Story.  

Here is what Warren had to say: (from notes)

She has been studying what has been happening to people around the country.  The status quo is bad.  It created financial crisis and subprime mortgage meltdown with all of its implications, including millions losing homes, 10-12 million could lose to foreclosure before this is over.  

Dangerous products were fed into the system.  These products destabilized families and  destabilizing families destabilized the economy.  It's not just mortgages.  Look at payday loans, and the traps involved... And credit cards.

What it comes down to is that people who never thought they were at risk, but then when interest goes from 9.9% to 29% it is just unmanageable. People are thrown to ground.  When families get cheated we are all at risk.  This destabilization at a family level echoes throughout the economy.

Safety works.  People getting cheated.  Agencies work.

Look at how credit card business models have shifted.  The old model was a you getting a card based on your good credit, if you qualified.  But now they hold up low interest or a free gift or say it is a cool card to have, and you get the card, and then they make their money from the traps and tricks in the fine print that people just do not know about.  Lenders hide costs and prey on customers.  So no one can compare the cards.  It is a market driven by the tricks and traps they can hide.

We have the FDA.  In the 1920s anyone with a box of chemicals and a bathtub could start a pharmaceutical company.  How many people are alive today because now we have basic safety protections on drugs.  And this makes it safe to invest in good products and good companies.

Look at the Consumer Product Safety Commission - the agency sets standards, and child car seats are safer etc.  

Safety works.

The David and Gioliath nature of this story shows up in multiple ways.  Lawyers that create these deceptive and dangerous products - come in well-funded teams.  These companies use these teams of lawyers and sociologists and psychologists, and find as many ways as they can to trick people.  

In contract law an equal contract is both sides have good knowledge and that is basis of legal binding in contracts.  Both sides have an understanding of what they are agreeing to.  But here we have had large financial institutions writing contracts no one understands and writing the regulatory rules over the last 15 years, and that is what got us into this mess.  Then they turned to the taxpayer and said, "Bail us out."

They have survived because of that taxpayer bailout and their response is to turn around and fight to continue to be the ones who write the rules so they can do it all again.

This is about survival of families but also fundamentally a question of where our country and economy goes.

Then Ed Mierzwinski of U.S. PIRG talked:

We are up against a massive well funded lobby trying to protect the status quo. They are using the big lie.

This will create 1 agency instead of 7. It is replacing, not creating a new layer.  The analog agency is the FDA.

The big issue now is preemption, where they are trying to override stale rules that might be stronger.  We must allow states to have stronger regulations.  Let the federal agency and regulations be a floor not a ceiling.

Mierzwinski then listed members of Congress who should be contacted to let them know that there is support for creating this CFPA:

Top of the list: Melissa Bean, D-Ill., because of her opposition to state preemption.

Also on the list:

Paul Kanjorski, D-Pa.
Dennis Moore, D-Kan.
Gregory W. Meeks, D-N.Y.
Carolyn McCarthy, D-N.Y.
Charley Wilson, D-Ohio
Ed Perlmutter, D-Colo.
Joe Donnelly, D-Ind.
Bill Foster, D-Ill.
Walt Minnick, D-Idaho
Mary Jo Kilroy, D-Ohio
Ron Klein, D-Fla.
Travis W. Childers, D-Miss.
Steve L. Driehaus, D-Ohio
Jim Himes, D-Conn.
Gary Peters, D-Mich.
Dan Maffei, D-N.Y.
John Adler – NJ-3

Joseph Crowley, D-N.Y. (not a member of the committee, but is chief deputy whip and is the chairman of the New Democrat Coalition.)

Here is Elizabeth Warren talking about this agency, in July:

Also working on this:  The Center for Media and Democracy is launching the Real Economy Project this week to "to simplify these complex issues and give you a voice in the debate surrounding proposed public policy fixes."  They will also be launching a Bankster site to "to be your go-to site for updates on the financial services re-regulation fight in Congress and for progressive net-roots campaigning against the big boys on Wall Street."  It will be at www.banksterusa.org and will be about accountability.  (I'm also working with them on these.)

Finally, see this post from Sunlight Foundation:  Top Financial Services Committee Members Rely Heavily On Finance Campaign Contributions,

One year after the biggest economic collapse since the Great Depression, Congress is still debating new financial regulations to protect consumers and prevent risk-taking in the financial sector. The House Committee on Financial Services is currently undertaking the important first step of writing, amending and voting on some of the pieces of the long-proposed financial regulatory reform. While debating these issues top committee members have been the recipients of disproportionate campaign contributions from the very industry that they are tasked with regulating.

Go read -- it's enlightening.  

Originally posted to davej on Tue Oct 13, 2009 at 04:54 PM PDT.

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Comment Preferences

    •  Abusive practices push millions into poverty (1+ / 0-)
      Recommended by:
      mattman

      But all long as the campaign cash keeps flowing the abuses will have powerful defenders in the Congress.

      'We risk consigning future generations to an irreversible catastrophe' -Barack Obama on Global Warming

      by Lefty Coaster on Tue Oct 13, 2009 at 05:06:52 PM PDT

      [ Parent ]

  •  One step at a time, please ... (9+ / 0-)

    ...First, I would like to stop banks from charging me extra fees for fleecing, looting, scamming, swindling, tricking, conning, and ripping me off.

    I have, after all, lowered my expectations since I've been told from so many corners that there is only so much that can be accomplished with Democrats in charge of the three branches of government.

    Science can lead to truth; only imagination can lead you towards meaning. - C.S. Lewis

    by Meteor Blades on Tue Oct 13, 2009 at 05:02:57 PM PDT

  •  nice diary, daveJ (2+ / 0-)
    Recommended by:
    mattman, Lava20

    the banks are moving big time against the Consumer Protection Agency. And Warren is a hero.

    Barney Frank's watering down of the protections in his committee was frankly quite disappointing.

    Finally, a shout out to Meteor Blades for this marvelous bit of ironic prose -

    that he/she's recently been told

    there is only so much that can be accomplished with Democrats in charge of the three branches of government

    We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

    by puffmeister on Tue Oct 13, 2009 at 05:12:56 PM PDT

  •  Outstanding diary, where/when it matters, too! (3+ / 0-)
    Recommended by:
    mattman, Halcyon, puffmeister

    A big thank you from me for your efforts.

    Too-big-to-fail "national rate exporting" is quite shameless, in terms of the national credit card lenders being able to "import" much higher rates to other states where these big banks do business. The truth is that the national credit card providers' rates are now higher--in many/most instances actually much higher--in most states where state-chartered subprime lenders also extend credit (at, believe it or not, lower rates, because they're governed by the usury laws of those states).

    It's really quite ironic.

    Take Arkansas as an example, with just about the lowest retail usury rate in the country...right now it's around 12% (give or take).

    If you're a large nat'l credit card provider doing business in Arkansas you may "import" the rate from the home state where your company's headquartered (i.e.: if memory serves me correctly, this is why most major credit card co's are headquartered SD and DE, because either the usury rates there are ridiculously high, or no usury rate exists, at all) and charge whatever that is (or what they want, if there's no usury rate that corp's hq/home state), which may often be >30% A.P.R., while lenders headquartered in the State of AK may only charge up to the state's usury rate (i.e.: 10%).

    So, by definition, national lenders make a TON of money exporting their rates to other states. With that as the carrot, they pour tons of money into marketing in those states, blowing out of the water all of the smaller lenders that are charging much less in a given state, as well. Of course, the wise shopper should be aware of this, but, the playing field is so heavily weighted towards the larger banks, when you'd think it'd be just the opposite, the larger banks still manage to extract most of the business (in those states), too!

    (An in-depth/behind-the-scenes analysis of why these larger banks get so much business in these states, I'm sure, would be most illuminating!)

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Tue Oct 13, 2009 at 05:17:59 PM PDT

    •  Thanks (1+ / 0-)
      Recommended by:
      puffmeister

      -- Seeing The Forest -- Who is our economy FOR, anyway? Twitter: dcjohnson

      by davej on Tue Oct 13, 2009 at 08:13:40 PM PDT

      [ Parent ]

    •  Bob S you are RIGHT - there was a Race To The (0+ / 0-)

      Bottom - mostly to Delaware - some time ago [when you were a gleam in yr dad's eye] - I believe it was not long after the Congress allowed the existence of Natl Financial Holding Companies and enaks as their subspecies.

      [Much of what I learned in my financial institutional law seminar in laww school has now fallen out of my left ear as new info arrived into my right ear but your take on this race to the  bottom is EXACTLY right.]

      It was a death blow in many ways for state chartered banks that  may not have been apparent, so long as the Natl Reg Agencies left state usury laws alone. But then, around 2003-2004 the OCC woke up to realize that under Bush it could issue Rules of Preemption -= fought by a nearly unanimous state banking Commissioners - to overstep the states. I used to have a Google alert taged "OCC" because my job at Acorn Nalt Finance was discovering all the homeowners whose states could no longer help them with predatory lending practices...

      We are only now seeing the real mess come to fruition with growing demise of the smaller Banks who canot compete with the 'too large to fail' big banks.

      anyway I figure this diary is about dead after a day so I'm juwt writing to say hello to you and thanks again for respnding to my Q on the statistical thing in Afgh.
      best--

      We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

      by puffmeister on Wed Oct 14, 2009 at 03:20:48 AM PDT

      [ Parent ]

  •  NY Times story from the 10th... (0+ / 0-)

    My moral compass is just fine... now where was I?

    by cooper888 on Tue Oct 13, 2009 at 05:28:38 PM PDT

  •  The plot thickens. (0+ / 0-)

    Unfortunately, we have so many issues, so little time. Nevertheless, we're going to have to gear up on this, because it's probably our last real opportunity as a nation to stop the ongoing theft of our national assets and national life.

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