I've been following the productions of the Banking Reform Comedy Club for about a decade now, and two of the main skits - "Credit Card Reform" and "Regulatory Reform" - were performed this past week. The former I was going to write about some time ago but then I decided to wait and see how banks reacted to it. Well, it went into effect on Monday of last week and Sam Pizzigati tells you how it worked out so I don't have to. (Via Norwegianity)
On Monday, the new credit card reform law enacted last year - legislation designed to protect consumers from excessive credit card fees and penalties - went into effect.
By Wednesday, consumer watchdogs at the Demos think tank in New York were reporting that banks nationwide were blitzing consumers with "a wide range of new and excessive fees and penalties" that sidestep the new law's prohibitions.
If you still have active credit cards I strongly advise you to read his column so you'll at least know how they're ripping you off even if you can't stop it.
But it's the latter skit I want to review today because it's such a classic example of its type. All the comic elements are there: hypocrisy, pretense, slapstick self-promotion, witless pseudo-Fieldsian exaggeration, and bipartisan clown-car pratfalls with Ace Clown Chris Dodd playing lead.
Let's begin back in January's episode when Chris announced his retirement and his dedication to spending his remaining years in the Senate fighting for banking regulatory reform, which he called one of "the two most important issues of our time." As Chair of the Senate Banking Committee, how's that working out for him?
Details of part of his plan [to overhaul financial regulations] became public in news reports on Friday. The most hotly disputed elements - the creation of a consumer protection agency to watch for deceptive and abusive terms on mortgages, credit cards, payday loans and other financial products - are a reminder of how intense lobbying and partisan gridlock threaten to significantly weaken what the Obama administration has called a top priority.
"The financial services lobby and particularly the big banks are driving the agenda right now," Travis B. Plunkett, legislative director of the Consumer Federation of America, said. "They are the ones gaining ground. Their strategy is clear: death by a thousand cuts."
As part of a regulatory overhaul adopted in December, the House voted to create a freestanding Consumer Financial Protection Agency. Since then, the financial services industry has been largely unified in trying to reduce the proposed agency's independence, as well as the scope of its powers.
The lobbying effort has been so fierce that the Treasury secretary, Timothy F. Geithner, called a meeting on Thursday with representatives of the United States Chamber of Commerce, the American Bankers Association and six other groups, at which he warned that failure to pass a regulatory overhaul could destabilize the markets.
(emphasis added)
Destabilizing US markets, of course, being a much more serious crime than destroying the world economy for private profit, which is what the banks worked on last year.
So what's the big deal about dropping the consumer agency, anyway?
Under Dodd's plan, "[t]he agency proposal would be dropped." Consumer groups and labor unions had been pushing for independence as key to the agency's success. Bank regulators, they argued, should not have authority to veto consumer protection rules, because they have the interests of the banking sector as their central priority, rather than concern for abusive practices.
Consumer groups also wanted a presidentially-appointed head of the agency and an independent funding stream. Dodd's proposal includes both of those. But without independence, the agency loses its ability to write or enforce strong rules.
"We appreciate Chairman Dodd's extensive efforts to secure bipartisan support for this critical part of the financial reform bill, but effective reform is once again being blocked by opposition from the big banks that caused the current financial crisis. The revised proposal does not provide what is needed to protect American families or the financial system as a whole: a strong, independent Consumer Financial Protection Agency with the power to set and enforce fair rules for all types of credit," said Heather Booth, Executive Director of Americans for Financial Reform, in a statement.
No? That's not what Dodd writes in today's Politico.
The status quo is unacceptable.
That's why I have led the Banking Committee in a yearlong examination of every aspect of our financial system - holding dozens of hearings and listening to hundreds of experts, academics, regulators and consumers. And that's why I have made every effort to solicit the input of my colleagues from both sides of the aisle. Their ideas can only strengthen our final product.
Today, I am pleased to report that the good work done by the Democrats and Republicans on the Banking Committee has put financial reform in a strong position. While we are still working to establish consensus on some parts of this complex and comprehensive legislation, the enormous efforts of my colleagues would indicate they believe, as I do, that financial reform is too important to reduce to partisan talking points.
The stakes are too high - and the American people have suffered too greatly - for us to fail in this effort. As I continue to work with my colleagues to form a strong bipartisan consensus, I am encouraged by their willingness to work toward a solution.
And make no mistake: We will have reform this year.
Uh-huh. Paul Krugman's so fed up with Dodd and his unfunny Comedy Crew that he thinks it might actually be better if we had no reform bill at all.
Should Democrats accept such a watered-down reform?
I say no.
There are times when even a highly imperfect reform is much better than nothing; this is very much the case for health care. But financial reform is different. An imperfect health care bill can be revised in the light of experience, and if Democrats pass the current plan there will be steady pressure to make it better. A weak financial reform, by contrast, wouldn't be tested until the next big crisis. All it would do is create a false sense of security and a fig leaf for politicians opposed to any serious action - then fail in the clinch.
***
Is it important that this protection be provided by an independent agency? It must be, or lobbyists wouldn't be campaigning so hard to prevent that agency's creation.
And it's not hard to see why. Some have argued that the job of protecting consumers can and should be done either by the Fed or - as in one compromise that at this point seems unlikely - by a unit within the Treasury Department. But remember, not that long ago Mr. Greenspan was Fed chairman and John Snow was Treasury secretary. Case closed. The only way consumers will be protected under future antiregulation administrations - and believe me, given the power of the financial lobby, there will be such administrations - is if there's an agency whose whole reason for being is to police bank abuses.
In summary, then, it's time to draw a line in the sand.
Not so good. Worse if you pay attention to Reuters' Felix Salmon.
The Bureau of Financial Protection proposed by Dodd was pretty toothless: its rules could be vetoed by the Systemic Risk Council, it would essentially be barred from enforcing its own rules on small institutions, let alone examining those institutions, and it would have to talk to bank regulators before enforcing any rules on bigger banks.
Worst of all, Dodd's compromise would "adopt the House-based preemption standard", which is code for saying that individual states would be barred from stepping in to regulate consumer rip-offs if and when the BFP was asleep at the wheel.
He goes on to note that "even this weak excuse for a CFPA has proved too much for the Republicans" to swallow and suggests what could be a great change in the script.
At this point, I'm beginning to think that Dodd should accept whatever [GOP Sen Bob] Corker would find acceptable - probably just a charge for existing regulators that they keep an eye on consumer protection as well. Then Elizabeth Warren should team up with the Center for Responsible Lending to create a Consumer Financial Protection Agency entirely unafilliated with the government, which would give out "consumer friendly" badges for financial institutions which meet its standards, and which would have a high-profile bully pulpit from which to name and shame those institutions which rip off their customers. It might not have any teeth, but in that respect it wouldn't differ markedly from whatever we're going to end up with from Dodd and Corker.
All in all, the new season of the Comedy Crew suffers from only one glaring flaw: Harry Reid and His All-Star Non-Reform Healthcare Reform Komedy Klub (Featuring Find-of-the-Year Scott Brown) already gave us pretty much exactly the same routines. We've seen it all before, guys. There isn't an original line in the entire script and the characters have been seen so often that you're beginning to look like the 5th or 6th in the string of Annette & Frankie beach movies: all tired, unfunny cliches we've seen before, a compendium of dumb blondes and even dumber jokes.
If this series isn't refreshed with some new writers and new tricks, there really won't be any reason to re-new it for another season. (And new bikinis for Dodd and Reid won't do it so don't even start.)
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