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Bank Lobby Defeats Obama Reform Plan
Hill resisting financial plan
Congress appears set to ignore President Obama's proposal that banks be required to offer "plain vanilla" financial products such as 30-year fixed-rate mortgages, giving the banking industry an early victory in its fight with the administration over how to reform the financial-services sector.
Barney Frank (D-MA) chairman of the House Financial Services Committee waits for President Barack Obama to speak about the global financial crisis at Federal Hall in New York, September 14, 2009. (REUTERS/Jeff Zelevansky) Instead, House Financial Services Committee Chairman Barney Frank will forge ahead with plans for a watered-down Consumer Financial Protection Agency (CFPA) -- a blow to the administration's push for tighter regulations and more control over the banking and financial-service industries.
In a Tuesday memorandum from Mr. Frank to Democratic members of his committee that was obtained by The Washington Times, the Massachusetts Democrat said he was making several changes to the president's plan "to make clear that CFPA will not disrupt merchants, retailers and other nonfinancial businesses or subject banks and other depository institutions to needless additional regulatory burdens and costs."
Key among those changes is Mr. Frank's decision to omit the "plain vanilla" mandate from his pending CFPA bill.
So-called "exotic" financial products -- particularly subprime mortgages that typically offered low introductory payments that later ballooned in size -- have caused soaring default rates and were considered a major factor in last year's financial crisis. The administration had wanted to ensure that banks and other mortgage lenders give customers the option of less risky fixed-rate and simple adjustable-rate home loans.
But the mandate for "plain vanilla" products has appeared politically unattainable amid growing opposing from financial institutions, Republicans and even some Democrats.
Forcing banks to offer such products would mean that financial products not labeled "plain vanilla" would be ripe for lawsuits, said Scott Talbott, a spokesman with the Financial Services Roundtable, which represents some of the nation's biggest financial-services firms.
"The government should not dictate products," he said.
The proposal also was expected to fall flat in the Senate, where even some Democrats questioned the wisdom of mandating "vanilla" products.
Kirstin Brost, a spokeswoman for Senate banking committee Chairman Christopher J. Dodd, told the Associated Press that the Connecticut Democrat "has a hard time seeing how plain vanilla would work," but he is still working with his colleagues to draft the legislation.
Mr. Frank also is calling for "nonfinancial" businesses, such as merchants and retailers, to be exempt from CFPA oversight, according to the memo.
But Mr. Frank's revised plan still would create a new agency with many new powers. It would monitor the fine print on such products as mortgages and credit cards, and require that lenders be upfront about the cost of their products.
It also would consolidate many of the regulatory duties that are spread over several agencies, such as the Federal Reserve, the Office of Thrift Supervision, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.
The financial-services industry has waged an aggressive advertising campaign against the proposed agency, saying it would stifle investment and innovation in the financial world and possibly slow down the flow of capital.
"There were some fissures that became apparent around mid-July when people said, 'Wait a minute, what does this thing really do?' " said one banking industry official. "It's really a huge government overreach."
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81 Comments so far
Show AllScott Talbott, a spokesman with the Financial Services Roundtable, says, "The government should not dictate products."
Enthusiastically agreed, yet we're about to get a law that dictates purchasing a product (health insurance). It would be merely ironic if it weren't also expensive, insulting and ultimately futile.
Righto, Mr. Talbott. The government shouldn't dictate we buy defective products since governments are only instituted among men to secure their inalienable rights and organize a government most likely to effect their Safety and Happiness. Seems those revolutionaries thought government should regulate against defective products.
Banking has always been a hazardous product, and people went to a lot of trouble to create reliable banking. That banking - as a public good or public utility - was, and should be again, walled off from investment banking. I agree with Mr. Talbott that the public should not have been forced to bailout investment banking's defective products. Our government should not protect investment bankers from their own folly. Government should only protect plain vanilla banking as a public good, a utility for orderly commerce. Y'all can dictate your own products and stand behind both their profits and losses.
A side benefit of letting these investment bankers go under would have been that they could no longer afford to buy our government. The same for the free marketeers in healthcare. If we don't want gummit run healthcare, then stop the trillion dollar subsidy that already enriches the Industry. Let sick people die in the streets and the rich can step over them. Soon, either only the rich will have care or the price of care will become affordable, but Blessed be the Free Market is back in style without so much as a blush. Can't have it both ways, Mr. Talbott. Can't say we don't want the government dictating products but still want all the corporate welfare. After all, who guaranteed those mortgages and who now holds all the bad paper product you produced?
barney is less then forthcoming when he talks about these
things. i've called his office to speak to him about new
regulation only to very nastily blown off by his staffer
for banking regulation. barney is also very comfortable
receiving " campaign contributions" from banking while
purporting to be doing the peoples work. barney is your
typical modern on the take politician who talks out both sides of his mouth!
What did you expect from this tight-lipped degenerate? when he speaks at all it is usually to get normal people so sick with his lisping lies one can hardly stand to listen. Who could still trust this lying bastard after all this time--how does he keep getting elected. This is another reason we need real change. If anyone is offended by what I'm saying--it's not about you it is about him personally.
Please don't stoop to stereotyping and name calling.
It makes you look bad and makes feel sorrier for you than mad at Mr. Frank.
Usually agree with onecaptjim, but...? Why do you call him a degenerate? What does his lisp have to do with anything? Would never have thought you a homophobe.
Ha! Surprise!
What is Barney being blackmailed again? I really have no idea this time, but shit. I personally don't care one whit about his sexual affections, but in this bible thumping nation of hypocrites he is a freaking liability.
Tell Bernanke to shut of the presses, quit giving the banks our money, and show us their books still laden with the same old toxic assets that Geitner is quietly pawning off on us.
They're claiming huge profits now and telling us FU.
What balls these people have.
They have balls mainly because...the greater public doesn't have the balls to force them out.
We damn well need to develop the balls! We need to KICK THE CORRUPT OUT OF CONGRESS! And don't give me that 'lesser of two evils' crapola---it was dear Billie the Democrat who repealed the banking regulation that FDR did during our last major depression. Billy set us up for the current situation with the banking deregulation, the end of welfare as we know it (ending another of FDR's programs that garanteed that a child in the United States has the right to food, clothing and shelter), and best of all! NAFTA the loss of American manufacturing jobs.
If your 'representative' voted for the bankster bailout, the surge in Afghanistan, and has not signed on for Medicare for All, Single Payer HR 676, that person is corrupt. He/she is a paid mercenary for the very wealthy and is not voting in your interst. Don't vote for that person again! Kick 'em out!
You make a lot of sense... Use the power we have more effectively. Takes some work, but it's worth it.
Congress doesn't give a crap.
Our police and military now operate to protect US corporate interests.
Our domestic spy agencies have infiltrated, harassed, and trashed social and political groups working to change the status quo.
So, tell us how to force them out without getting our heads bashed in and OUR BALLS shot off.
The entire system is rigged against us. The rest of the world would have to force them out because the shit storm we're facing is not going to be effectively internally challenged.
Other than getting out of Dodge, I'm at a loss.
If I'm missing something, feel free to make my day.
Without getting our heads bashed in? No, I don't see any other way. Did the Colonialists wimp out against England, expecting King George to negotiate and compromise? They knew they had to force the issues if things were ever to go better for them, and their lives would have to radically change if they were going to make it happen. They had to risk it all. You can add 1789 France and 1917 Russia to that list as well.
Would most sane minds prefer not to resort to war or violent conflict? Of course. But at certain points it becomes an immovable object against an irresistible force, and peaceful methods just won't work. Those corrupted in power will NOT give it up voluntarily. History tells us that.
What I'd like to know is: just how financially and morally bankrupt will we have to become before we've had enough, and decide that the risk of a fight is preferable to living as slaves to a plutocratic oligarchy?
Wish I could make your day, but I am also at a loss. Sometimes, I indulge myself in the hope that the calvary will ride over the hill, i.e., insiders will decide to stand up for their country instead of the PTB. Short of the people getting some unexpected help, I think we're looking at the collapse of our nation.
It is quite sad how we have tried to defend ourselves. The Left put its hope in the internet. The Right put its trust in guns. I don't see how either one changes the complete takeover of our military, media and government. All I can say is hold onto your balls and hope for the best. No one knows the future, and there may yet be a game changer.
sierra7
As in other sites I sense a great feeling of "helplessness" in the comments. That is natural when there is no (or at least very little) "historical perspective (memory)" on how to change things in a country who's government is going downhill fast in relation to the reality needs of its people, and its' collective political power being concentrated in fewer and fewer hands.
"Change" will not come from a president (no matter which party) for the people unless the people force that change on the president (and the rest of the government). Any government. That's the sorry story of history.
Our "civilian" police corp has been "militarized" over the last 20 years to a point that it is difficult to tell them in some cases from an occupying power. And, the actual military is poised to swoop down on any part of the country to suppress any type of legitimate rebellion against the fascist policies of our financial/government sector.
Change will come when the people take to the streets regardless of the power of the state to force change....but, it is up to the people to organize (like organized labor, who have been betrayed by their own leadership) and fight.
That's the bottom line....forget these crappy "town hall meetings."
The streets is where change is made. Or, on the "factory floor."
There is a great risk to life and limb. When the public recognizes that there is not other way, that road will be taken. Not until then.
That's historical.
change to what--what's the new narrative or paradigm shift/vision we/you're after! Can you flesh one out--- one that cuts across all single issues interest groups, one that captures & engages the popular imagination?
My 2cents on 'how to' transform/grow a culture/society into 'what'----the what is "A culture that extols the virtues/covenants/treaties of; a Human Rights Education/Literacy Framework"-- an idea, that has sovereignty over all other ideas/ideaology/theology/philosophy---who is going to stand on a public stage & declare they are against HR.
We know the methodology of 'how to' create a new habit of thinking, where it becomes habitual. Teach it daily, beginning in pre-school (the how & why)---through high school, in India, the worlds largest democracy, it is only democracies that can be the vehicle for the delivery system of a HR Framework, & front-line classroom teachers are the instrument with which to inject the next generation of society-- they advocate, through post grad-school, their rational, 'so that our youth will gain an understanding & sensitivity to the HR of others.' which at it's core is the worth & dignity of each & every individual--to have as their birthright, the basic fundamental necessities within all domains of society---civil, political, economic, social, cultural & environmental.
All the resources & materials exist, & then some----to my mind, the question is a matter of application! Yet if the popular imagination is not alive to such ideas, what can we expect but more variation on the theme w/more or less the same results. Before one can behave differently, attitudes must change, thinking/perceiving w/another frame of reference to create a new mind-set. The transformational force/power of education.
No, you have it quite well defined. I'd bet my jackboots on it. One minor correction. You state "Our police and military now operate to protect US corporate interests." You should replace "now" with "have always". Did that make your day?
Well the very idea was most likely dead on arrival anyway, (given the bribery power of the banking lobby and the willing complicity of congressional members to be thus patreonized), but having someone like Barney Frank who sounds like Elmer Fudd whenever he opens his mouth as your champion doesn't help much either.
"Pwetty pwees fellwo members of congwess can we have some banking wefowm?"
Yeah sure Barn, when we finally stop laughing at you we'll get around to thnking about it.
Poet
Bullies not poets make fun of people with speech impediments. Isn't there enough to deride Frank about without resorting to making fun of the guy because he isn't straight or because he talks different than you?
Bleh.
Why the surprise by the sheeple? This is the way Washington works. The biggest critiques are the people who keep voting Democratic. Reminding us of the power of self-emasculation.
Royce
Did the Banking committee take any testimony from bankers whose banks did NOT fail and did NOT require bailouts? It seems to me that it would be wise for the Goliaths to adhere to the policies of the Davids. Banking success rather than banking failure should outline the core for any reform plan.
Good idea.
Absolutely! But then your idea would make sense. An unusual commodity in Washington for a decade.
The silver lining I guess is the further confirmation this provides that the US government is completely dysfunctional (certain well-connected and powerful corporate parasites are being allowed to kill the host -- a functioning economic system -- that all the parasites depend on) and the unraveling and disintegration of the US political/economic system and empire will only accelerate.
Barney Frank is a big phoney who runs with the pack, which is now very transparent. If there was ever any illusions about the corporatocracy that runs the country, at least this helps break down those illusions. The power of capital will not be challenged in the halls of congress.
"innovation in the financial world"
In English: New ways to skim part of your money as it goes from you to whoever is providing an actual product or service to you.
"Financial Innovation": Flim Flam
Here's the deal, folks: there will be no substantial regulatory reforms and little meaningful enforcement, because the bankers are set to re-inflate yet another bubble in the coming years, only to have it crash once again and make zillions, handed to them as usual by their bribed legislators in Congress. What will the next one be, the cap and trade scheme? We've seen the cycle how many times now?
And, there isn't a goddamned thing you're going to do to stop it by mere voting, signing petitions, berating your "representative" over it, or weak, non-violent protests. Those methods have been largely rendered ineffective and nearly useless against such a behemoth. It's like Whack-A-Mole - as soon as you beat one of these political or financial thugs down, or one of their criminal policies, another pops up to replace it.
Until this rigged, fascistic system is cleared out from top to bottom by much more aggressive means, it will continue.
seditious: you got it straight bro
you write: "Here's the deal, folks: there will be no substantial regulatory reforms and little meaningful enforcement,"
hey - its just like the health care reform non-event
one thing is clear - we are finding out who owns this government
that is fascism you can believe in...
double post, sorry.
Well said, Seditious.
after the hi tech gangsters
accounting fraud comes home
after the oil gangsters
some troops come home
after the banker gangsters
the war comes home
after the media gangsters
the fascists are home
cheers
The Bank Lobby Defeats Obama Reform Plan
Is anyone really surprised by this latest headline?
As for Representative Barney Frank -- I agree with "tell the truth."
This is what our bailouts produce. Obama joined Bush in bailing out capitalism when its internal contradictions would have destroyed the beast. Well, enjoy your continued slavery to predatory capitalists, folks. Bend over.
Obama is a capitalist stooge, just like every piece of filth who preceded him as president.
It SHOULD be patently obvious to all that the one and only reason that the Bank Lobby wins here is because they own the government of the USA. WE all know that. I am sure others are starting to clue in.
There is no rational nor logical reason why there should not be more regulations that has been advanced that can stand up under scrutiny.
Now the next question is how will the rest of the World react to such? Europe has been demanding more oversight as has China and Japan. The US economy is totally reliant on inflows of Capital from foreign States.
Is this another stake driven into the heart of Globalization wherein various Countries try to isolate themselves from the failure that the US Economic system is so as to ensure they do not suffer from the next inevitable bubble bursting?
If so this COULD all have a silver lining.
If there is a silver lining for Europe, Japan, China, etc., I wonder if they'd take in many of the vast majority of average Americans that would suffer, or help us at all - like we helped them during and after WW's I & II.
My guess is they'd leave us to twist in the wind, while scavenging up in the business sense what would be left of the US carcass. My how things have changed.
Uh, you do know Europe is taking in tons of Iraqi refugees, don't you?
I think I'm misunderstanding you post.
That's been well known, but that's Iraqis. I mean would any of those countries help US citizens, should a total economic/dollar collapse occur as Gw speaks of?
I doubt it.
Well is is American citizens the world loathes, or our leaders?
That's one question I'm eluding to, yes.
Why should they help out U.S. citizens? I remember being in Europe in 2003, and having people say, "we don't have anything against you. It's your government we can't stand." When I was back there in 2006, people were saying "your government is killing us, and WTF are you doing about it?" We've gone along with the program. Only the most kind-hearted will have sympathy for Americans, IMO. At least for white middle-class Americans.
No, millions of US citizens did NOT go "along with the program". They just haven't found the audacity [yet] to string the bastards up like the Italians did to Mussolini.
Good questions. First, don't expect anyone to help the US. China is a very nationalistic and protectionist country. At best, they could take care of your organs - if they need them. Europe is toast and it goes where America goes. Second and more important, don't panic, it is not over yet. Globalism is going the way of the dinosaurs. The crooks have a hard time accepting it yet, but it will catch up to them. It's what they did to themselves... We have to simply work for our country and against corruption, the rest will come by itself. OK... there are lots of doomsayers... ignore them.
"The worst part of the decline is yet to come. Bank failures and home foreclosures are yet to peak. The commercial real estate bust is yet to hit. The dollar crisis is building.
When it hits, interest rates will rise dramatically as the US struggles to finance its massive budget and trade deficits while the rest of the world tries to escape a depreciating dollar."
Paul Craig Roberts:
http://www.counterpunch.com/
The Economy is a Lie, Too
I read the article on counterpunch by Paul Craig Roberts.
He is so clear with his stats and his arguments.
I hope others choose to read The Economy Is a Lie, Too.
It's a great article. Everyone should read it.
I did and have always read his stuff. He tells it like it is.
Also I got a kick out of Greg Palast yesterday. He got a hold of a White House memo questioning the thinking process of Bernake in saying the recession was over (i.e. paraphrased as "what's this guy smoking?"). It's at Huffington Post.
Thanks, I'll read it!
Paul Craig Roberts is always great. I recommend everything he writes.
so much for "crusading liberals" Chris Dodd and the inexcusable Barney Frank. Weasels...