If the description in the Times of the proposed consumer protection agency is accurate, then the Obama Treasury Department deserved a rousing two and a half cheers. The agency would be charged first and foremost with protecting consumers. Right now, the various laws that are designed to protect consumers are administered or enforced by agencies for whom the interests of consumers are, at best, of secondary importance.
The banks are squealing in outrage. Among other hilarious claims, they are saying that the agency might stifle innovation, by which they must mean all those cutting edge methods they’ve developed for systematically screwing their customers. Wouldn’t we all love to meet the innovator who had the bright idea of the cross-default clause, certainly something every consumer was clamoring to have. Liar’s loans are apparently another innovation we just can’t do without.
The plan is half a cheer short because, unless there’s something the Times hasn’t reported, the statute relies mainly on the new agency to determine what is or isn’t kosher so far as consumer lending and credit cards are concerned. That’s all well and good when the folks in charge of the agency actually believe in its purpose, but what happens when that’s not the case. Consider the fact, as Josh Marshall has reported, that the Republicans have systematically appointed people to the Federal Elections Commission who do not believe in enforcing the laws they are supposed to enforce. There are certain practices that should simply be banned outright. Giving the agency the power to make these policy decisions is also giving the agency the power to do nothing; which is exactly what any agency dominated by Republican appointees will do.
Another obvious problem is that, while this is a good step, it is not being matched by effective regulation of the financial instruments that the banks used to lay the country low. Sure, it might be harder to pull off another sub-prime scam, but if there is no regulation of dangerous financial instruments, such as credit default swaps, then the banks will just find another sector in which to spread their poison.
Still the bill is a step forward. It will now be interesting to see if Congress once again sides with the banks that, by all rights, we taxpayers should own, or with consumers. If the pattern holds you will hear support for the bill at first, and then the “moderates” will start spreading doubts, as the banks use our money to lobby against our interests.
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