The House Financial Services Committee will vote today on whether to establish a Consumer Financial Protection Agency. Former New York Governor, and Attorney General, Eliot Spitzer warned that while this new federal agency is important, it must not come at the expense of handcuffing regulators at the state level, who have been more pro-active in investigating the banks than the feds.
Spitzer argued that the federal government would try to limit the power of the state regulators because of heavy influence from the banking lobby:
Because the banks don't want us looking into what they're doing. We were looking at subprime debt. That was the very issue where the banks went to the OCC, and the OCC went to court to stop us, and we had to fight for years in the courts for the power to look at subprime debt. Meanwhie we've seen what happened.
Spitzer and Ratigan also examined which key provisions need to be in the bill but are being fought by the bank lobby.
Ratigan also interviewed TARP Inspector General Neil Barofsky on what the true cost of TARP will be, and whether the taxpayer will get their money back. Barofsky is not optimistic:
This idea that we're going to have a 17 percent return or a profit on the TARP is an incredibly unrealistic expectation. $50 billion to the mortgage modification program is not coming back. It's not coming back by design. Tens of billions of dollars to the auto industry - the administration itself acknowledges it's going to be a stretch to get that money back. Plus, uncertainty throughout the other TARP programs. We know that CIT is staggering on bankruptcy. If that goes down that's another $2.2 billion that's going to be lost. So while it's difficult to quantify the [true cost of TARP], I think we have to be more realistic about the likelihood of what it could be.
Barofsky also confirmed that banks like Goldman Sachs can continue to make massive and risky bets at the expense of the taxpayer because the banks still have access to very cheap loans from the government, who will no doubt bail them out if one of their huge bets goes south, because "there has not been meaningful regulatory reform in the financial system."
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