For Immediate Release
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167
Analysts: Another Financial Crisis on Way; Strong Regulation Needed
WASHINGTON - ROBERT WEISSMAN, via Dorry Samuels
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
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
"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.
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."
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