This was written on April Fool's Day, but sadly all of it is true.
Incredibly, last week, in a letter to Professor Elizabeth Warren, House Financial Services Committee chairman Spencer Bachus (R-AL), along with key subcommittee chair Shelley Moore Capito (R-WV), all but accused Professor Elizabeth Warren of lying to Congress in her recent, excellent testimony on the work of the Consumer Financial Protection Bureau Implementation team. The letter alleges that the existence of draft CFPB materials offering advice to the state attorneys general about the negotiation of a settlement with the large mortgage servicers (4 of the 5 biggest are owned by the biggest banks) somehow means that the CFPB is providing more than advice. Professor Warren, through her press office, stands by her testimony (New York Times). So do we.
Such political tactics can only be characterized as demonization -- or what Professor Adam Levitin calls a witch-hunt. They do not contribute to legitimate committee oversight, but serve only to cast unfair aspersions on a dedicated public servant, and add to an orchestrated special interest campaign to weaken the CFPB, as well as the entire Wall Street Reform and Consumer Protection Act passed last year after years of predatory consumer practices and reckless investment deals by the same Wall Street banks destroyed our economy. Washington should be implementing Wall Street reform, not tearing it down.
Next week, the committee holds a hearing on a Bachus proposal to weaken the bureau by taking its director (not yet nominated) and converting the position a 5-member commission. Would Chairman Bachus support a similar change to the leadership of the bank-friendly Office of the Comptroller of the Currency (OCC), the chief national bank regulator? OCC aided and abetted the financial collapse by issuing a rule taking state attorneys general off the bank crime beat while standing idly by itself while national banks ruined lives. Why doesn't OCC need a commission instead of its director?
We expect other proposals to pander to industry lobbyists, who have circled the Capitol. Their demands include: place the CFPB under the notoriously political appropriations process, strengthen the veto authority already granted an oversight panel over its rules, and grant more industry exceptions to its authority. The House has already wrongly asserted authority over the CFPB's budget, which is a transfer from the Fed, not an appropriation, by voting to reduce its budget by 40%.
Of course, the attacks on Professor Warren and the CFPB - the first federal financial agency with only one job, protecting consumers - are only part of a series of attacks on Wall Street reform. This week, the PIRG-backed Americans for Financial Reform issued a statement rejecting the peculiar pre-conceived notions of the House Financial Services oversight subcommittee that the cost of cleaning up Wall Street is "too high a price to pay."
But, powerful special interests are seizing the moment to make ludicrous claims that the U.S. House of Representatives is buying. This week Chase Bank kingpin Jamie Dimon even said derivatives didn't cause our financial crisis and that regulation of derivatives "would damage America." And the lack of regulation of derivatives didn't?
Meanwhile, Dimon's Chase Bank is about to start charging consumers an unprecedented "experimental" $5 double-dipping ATM surcharge to non-customers. Chase Bank is perhaps best known for foreclosing on military families in violation of the law, or is it for evading the new overdraft rules, or perhaps for Dimon's palatial salary and bonus? It now likely has the highest ATM fees outside a casino.
We hope consumers will reject that ATM fee by voting with their feet. And we can only hope that the U.S. Senate will reject all the ideas coming out of the House to weaken Wall Street reform. Has the House forgotten that just three years ago dangerous Wall Street practices led to the greatest economic collapse since the Great Crash of 1929? Has the House forgotten that the reckless conduct of the Wall Street banks cost Americans more than 8 million jobs, hundreds of billions in taxpayer funded bailouts, more than $8 trillion lost in home values and retirement savings, and millions of foreclosures and that the 2008 financial meltdown is also responsible for about $400 billion of our current government deficit?
It's no April Fool's joke. In Washington, you don't have to make this stuff up, it writes itself.
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