Yes, firebaggers, Dodd has killed the CFPA after all…and replaced it with a CFPB that has authority to rewrite all lending rules. Elizabeth Warren loves it, but I’m sure someone can explain to me how it’s still a sellout because it’s not going to be a stand-alone agency:
Dodd said that his set-up was the next best thing to an independent agency – and, in fact, better than a typical agency’s assessment process, whereby a regulator is dependent on those it regulates for funding, and also better than a congressional appropriations process, where a regulator is subject to the whim of individual members of Congress who control certain purse strings.
“Let me tell you, it’s a lot better to find resources through that mechanism than going through an assessment or an appropriations process. Look at the FTC [the Federal Trade Commission]. Look at Equal Employment Opportunity Office, what happens when you starve a budget. You can have all the wonderful laws on the books; if you don’t have a budget that allows you to operate, you die. So the fact that it’s at the Fed — access to Fed monies — in order to finance itself is far stronger than any other place it could possibly be, depending on an appropriations process or assessment process.”
Pinning the blame squarely on the practice of predatory lending in pursuit of tranche wealth, Dodd offers up the QOD:
“The root cause of our economic crisis was a lack of consumer protection,” Dodd said, emphasizing that the current regulatory structure is “hopelessly inadequate.”
Yes! The mortgage salesmen were rewarded for getting mortgages signed — any mortgages. The root of our economic distress is summed up in NINA: No-Income, No-Asset loan. This was to the detriment of both consumers and corporate consumers.
This very powerful new agency will have the power to prevent that sort of bubble from happening again and it will have all the money it needs to do its job. But it’s a sellout because it’s not a stand-alone agency:
“It’s terribly disappointing,” said John Taylor, president of the National Community Reinvestment Coalition, in an interview with HuffPost. “It’s a marked retreat from the original bill he proposed. You can keep using the word ‘independent’ all you like, but if the agency’s independence is dependent on approval from the agencies to make its rules — that doesn’t make it independent.”
Taylor’s problem is that the new CFPB’s rules will be subject to review by existing regulatory agencies, but the bill removes the agency incentives that made rules so weak. The bad loans were allowed to become bad financial products by regulators in a race-to-the bottom for territory; Dodd’s bill would close the Office of Thrift Supervision (three letters: AIG) and stop letting the industry choose among regulators. (Click here for a great chart on how the regulatory agencies would be restructured under an independent agency, and just tie the CFPA on it to a bubble marked “Fed.”)
It’s the strongest banking reform in 80 years, but it’s a sellout because it’s not the exact new animal we were talking about a year ago.
Here we go again…
