Support the Consumer Financial Protection Bureau

Remember the Great Recession???

One of the reforms Congress passed to try to stop a future repeast of the financial meltdown that hurt small businesses and individuals was the establishment of the Consumer Financial Protection Bureau (CFPB).

Below is a letter from my friend Katherine McFate asking for your support for the CFPB.  I encourage you to join the effort for a strong government agency that has already taken strong measures to protect us from the greed of Wall Street.
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February 20, 2013

In the wake of the meltdown of the financial markets brought on by risky and predatory lending practices, the Consumer Financial Protection Bureau (CFPB) was created to rein in credit card companies and other financial institutions that prey on vulnerable consumers. In the 24 months since it was created, we've applauded its substantive work and the outstanding way that it operates, inviting public input and exemplifying transparency. Unfortunately, its important work is now threatened. The Senate vote to confirm Richard Cordray as the head of the agency has been blocked for two years. (He's been there working under an interim appointment.) It's time for the Senate to take a vote.

Please tell your senators to vote on Richard Cordray's nomination so that the CFPB can continue protecting all of us from the exploitative practices of big banks, mortgage lending institutions, and credit card companies.

Thanks to the CFPB, approximately half a billion dollars have been returned to consumers cheated by credit card companies.

Thanks to the CFPB, new mortgage rules will protect families and level the playing field between small financial institutions like community banks and credit unions and larger banks.

Thanks to the CFPB, students will get more accurate information about the real costs of their student loans.

It required public pressure from Americans like you to establish the Consumer Financial Protection Bureau. Now it's time for us to demand a vote on Richard Cordray's nomination.

Please make sure that the CFPB can continue to defend citizens from unfair lending practices and other abuses. Write your senators today to demand an immediate, up-or-down vote.

Thanks being an engaged citizen!

Warm regards,

Katherine McFate
President and CEO
Center for Effective Government

More heads should roll and not just at JPMorgan

It’s hard to believe that just over two years ago I spoke at a press conference at the U.S. Capitol along with Senators Dick Durbin, Jack Reed and Michael Bennet calling for the Senate to pass financial reform legislation to protect small businesses and the public from Wall Street causing another Great Recession.  The passage of the Dodd-Frank Act is the background for the current controversy involving JPMorgan.

Today we might hear of more JPMorgan senior executives losing their jobs over that big bank’s $2 billion and growing loss.  Maybe its CEO Jamie Dimon will accept responsibility and offer his own resignation.  According to former and current JPMorgan employees, the decisions to engage in the highly risky and self-destructive trading that Dimon has called “sloppy", “stupid” and “bad judgment”, were approved by Dimon himself.

But JPMorgan shouldn’t be alone in cleaning house.  Contrary to what Eric Gehrnstrom, a senior adviser to the Mitt Romney campaign, said on NBC’s TODAY this morning, the proprietary trading that is costing JPMorgan billions is not just a loss to the shareholders of that bank and therefore no taxpayer money was at risk. 

Proprietary trading was intimately involved in creating the financial meltdown that caused the Great Recession.  It was the first domino to fall.  When the banks were facing insolvency and shutting down because of their greedy gambling with their own money, the whole economy teetered on collapse forcing Congress to bail them out with taxpayer dollars. 

These big banks aren’t the small, community banks we know on Main Street.  These financial giants turned into investment gambling houses through their proprietary trading.  And they weren’t doing this to help the nation’s economy.  This was all about satisfying the greed of their CEO’s, traders and stockholders at the public’s expense.

That’s why the Volcker Rule was put into that financial reform Congress passed in 2010 to prevent another Great Recession by severely limiting proprietary trading by banks.  But that rule, along with other needed regulations passed over two years ago, still is not in effect because hordes of bank lobbyists descended on the regulators and Congress to water down the reform.

It appears that the regulators responsible for writing the rules intended by Congress have forgotten that they are public employees.  We pay their salaries to do their jobs protecting us, not the big banks.  And the bank regulators charged with overseeing JPMorgan and the other big banks obviously aren’t doing their jobs in protecting us.  According to JPMorgan insiders the current proprietary debacle has been building since 2007.

If we expect accountability at JPMorgan, we should also demand accountability from the government employees who have kowtowed to the wealthy and powerful.  The regulators at the Federal Reserve, Treasury Department and the Commodity Futures Trading Commission who have been intimately involved in overseeing JPMorgan and “negotiating” with the big banks to loosen needed regulations passed by Congress should be re-assigned or terminated. 

Now, I am supportive of government employees.  They shouldn’t be laid off or not receive proper compensation just because we don’t make multinational corporations and the wealthy pay their fair share of taxes.  Government employees are an important part of our economy spending their money with locally-owned businesses.

But I also expect these employees to work for us, not work for the big banks in hopes of a better private-sector paycheck tomorrow.

Just as heads rolling at JPMorgan will send a warning to the other big banks about irresponsible proprietary trading, some deserved-house cleaning at our regulatory agencies will send a clear message to all who we have entrusted to protect us and our economy.

We need more financial regulations...not less

The story below is must read for all, especially those who think financial reform (Dodd-Frank) went too far.  To all those in Congress who want to repeal Dodd-Frank, here’s the story about the big banks you are defending and why Dodd-Frank didn’t go far enough.

Bloomberg
11-28-11

Secret Fed Loans Gave Banks $13 Billion

By Bob Ivry, Bradley Keoun and Phil Kuntz

Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

Read more