It is hard to overstate how out-of-touch the insiders in Washington are--and how much they are far more attuned to the demands of Wall Street and the financial powers-that-be. You can't find a better example than the apparent bi-partisan deal to give the Federal Reserve Board more power--and, most astonishingly, the power to protect consumers.
Here is how the insiders are almost guaranteeing another financial calamity for the people:
In an effort to secure Republican support for an overhaul of financial regulations, the chairman of the Senate Banking Committee on Monday proposed giving the Federal Reserve responsibility for protecting consumers from abusive and deceptive financial products.
Let's review the record. The Federal Reserve Board, under the leadership of Alan Greenspan, and with the nodding approval of the Fed's governing board--including, at the time, the head of the New York Fed, Tim Geithner--sat back, allowed and encouraged the real estate and asset bubble to grow. We know the outcome: a financial system in tatters and, more important, millions of people thrown out on the street--either because they lost their jobs or because they couldn't pay their mortgages or fees for retirement homes after the values of home equity and IRAs evaporated.
A lot of this happened because of greed. But, most of what happened occurred because the Fed and the financial community breathe the same air--they accept the same ideology and reinforce the same group-think that led us into the mess we find ourselves.
It isn't just a group-think that set the stage for the more recent asset bubble. It's a group-think that valued, for thirty years, the importance of the so-called "free market" over the livelihoods of millions of Americans. A point I have made before is the failure of the Fed to fulfill its legally-mandated goal of full employment, along with price stability. Can anyone cite an instance, in the past 10 years (and I'd say you could go back 20 years) where a Fed chairman uttered the phrase "full employment" in a statement about its long-term goals? And the insiders in Congress (many of whom, like my opponent, are awash in corporate, Wall Street money) have utterly failed to demand that the Fed pursue the goal of full employment.
And, so, now Chris Dodd wants to hand the power to protect consumers to the very institution that does not, and cannot, think first about consumers. You can't make this up.
I continue to support the Administration's proposal to create an independent Consumer Financial Protection Agency. If the Congress fails to do so, the president should veto any bill emerging from Congress that pretends to be about financial reform yet hands more power to the very institutions that cannot bring about real change.