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CONTACT: Institute for Public Accuracy (IPA)
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167
Analysts: Another Financial Crisis on Way; Strong Regulation Needed
Weissman is president of Public Citizen, which just released a statement: "Americans Need an Independent Consumer Financial Protection Agency."
ABC News reports today: "Even as many Americans still struggle to recover from the country's worst economic downturn since the Great Depression, another crisis -- one that will be even worse than the current one -- is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.
"In the report, the panel, that includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high risk investing that precipitated the near collapse of the U.S. economy in 2008."
Without more stringent reforms, "another crisis -- a bigger crisis that weakens both our financial sector and our larger economy -- is more than predictable, it is inevitable," Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.
Added Johnson: "Our government leaders have shown little capacity to fix the flaws in our market system." Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner "oversaw policy as the bubble was inflating" and "these same men are now designing our 'rescue.'
"Sen. Dick Durbin once said the banks 'owned' the Senate. The next few weeks will determine whether or not that statement is true."
The new report, "Make Markets be Markets," is online.
Professor of public affairs at the University of Texas at Austin, Auerbach is author of Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan's Bank.
Auerbach said today: "House Financial Services Committee Chairman Barney Frank announced Wednesday: 'I do not support housing the Consumer Financial Protection Agency in the Federal Reserve. ... My main objection to housing this critical function in the Federal Reserve has been the central bank's historical failure to implement consumer protection as a central part of its mission and role.' Chairman Frank is correct and should be supported. The next important step in preventing another financial meltdown is to take banking regulation away from the Federal Reserve and place it in an independent agency that is not controlled by the bankers it regulates. Two-thirds of the members of the 12 boards of directors at the 12 Fed district banks are elected by the bankers they will help to regulate. The boards elect the 12 presidents of the Fed banks who vote on the money supply. This is an immense conflict of interest that explains in large part why the Fed was unable to effectively examine the banks as they became overloaded with toxic assets. As I document in my book, the examination of large banks in New York City by the New York Federal Reserve was corrupted while regulated bankers sat on its board of directors."