An Administration in Retreat
by Charles Lemos, Thu Feb 25, 2010 at 04:52:13 AM EST
The Obama Administration is prepared to jettison the creation of an independent stand-alone Consumer Protection Agency in the hopes of securing quick passage of a financial reform package. The details from the Washington Post:
In hopes of quick congressional approval of a reform bill, White House officials are opening the door to compromise with lawmakers concerned about creating a new bureaucracy, according to congressional and some administration sources.
President Obama's economic team is now open to housing the consumer regulator inside another agency, such as the Treasury Department, though they still prefer a stand-alone agency. In either case, they are insisting on a regulator with political autonomy and real teeth so it can effectively enforce rules designed to protect consumers of mortgages, credit cards and other financial products.
The administration may also have to compromise on Obama's recent proposal for a rule to limit risky activities at banks by prohibiting them from engaging in many kinds of speculative investments.
Last month, Harvard Law Professor and Chair of the Congressional Oversight Panel that oversees the Troubled Assets Relief Program (TARP) Elizabeth Warren told the Huffington Post that Congress would be better off passing nothing at all if the financial reform bill doesn't establish an effective and independent consumer protection agency.
"The CFPA is the heart of what makes regulatory reform work," Warren said in an interview with the Huffington Post. "The consumer credit market is where the biggest abuses were. It is where families will be most directly affected and it is where the American people will see change. CFPA is how to make clear that regulatory reform is for them, and that it isn't a game among insiders.
"We just can't pass a regulatory reform bill that acquiesces to the industry on every front and where everything is so watered down that nobody has to take a hard vote," she said.
"It's not ok to weaken the agency so much that, while everyone can vote yes and pretend to support consumers' right to a fair deal, nothing really changes. I want a strong agency, and if there's not going to be a strong agency, then I at least want to see an up-or-down vote on it. Let's see a vote."
And if it fails?
"Shame on them," Warren declared.
Shame on them indeed. Perhaps it's time to send out a search party for Barack Obama's spine. Apparently, it's gone missing.