09/14/2011 02:13 pm ET | Updated Nov 14, 2011

Congress Takes a Stand -- For Wall Street

Anyone wondering why Congress has approval ratings that hover somewhere between cockroaches and the bubonic plague might want to check out the Sept. 6 Senate Banking Committee hearing on the nomination of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau.

This is really, really important stuff, and it got mostly lost in the shuffle as the media focused on the president's jobs speech and the 10th anniversary of 9/11.

At a moment when millions of Americans are suffering and so many worry that the system is hopelessly stacked against ordinary people, this hearing could have been a chance for the senators to show that they really do care about American families. Instead, what we got was partisan posturing and shameless dissembling.

Cordray, who has a strong record and a sterling reputation, came across as eminently reasonable, but few on the committee showed much interest in talking to him. The Democratic members seemed to focus on making the Republicans look like unreasonable, obstructionist shills for Wall Street, while the few Republicans who spoke did their best to live up to that image.

Sen. Richard Shelby of Alabama, the ranking Republican on the committee, pretty much ignored the nominee and opened with a diatribe demanding that the whole structure of CFPB be rewritten before any nominee could be considered. He actually called the hearing "premature," despite the fact that the law establishing the bureau was passed over a year ago after months and months of bipartisan negotiations. It was hard to avoid thinking that Shelby's version of "timely" would be more like "never."

It got worse. In a statement that Time called one of "the silliest" of the hearing, Shelby claimed, "The director will be virtually free of any constraints on his authority," insisting, "It's only a matter of time before this concentration of power is abused or misused."

Oh dear. No constraints? Really??? Call me silly, but the following statutory provisions sure look like constraints to me:

1) The president can remove the CFPB director for cause anytime.

2) Before issuing rules barring deceptive or unfair practices or simply administering federal financial laws, CFPB is required to consult with other regulatory agencies.

3) The Financial Stability Oversight Council can overrule any CFPB rule that it believes would interfere with the "safety or soundness" of the financial system. There is no other federal regulatory body that can have its rules overridden by other regulators.

4) CFPB's director must testify before each house of Congress twice a year and make detailed, written reports regarding its budget, rules it has adopted, and enforcement actions.

5) CFPB's budget is capped by law. Again, this is a limitation that applies to no other regulatory body.

6) The bureau is required to do a cost/benefit analysis of all proposed regulations and give small businesses an advance look at draft rules. It must evaluate possible increases in credit costs for small entities and consider alternatives that would minimize those costs.

And this list, believe it or not, just scratches the surface. A much more detailed description of the constraints, checks and balances that apply to CFPB has been put together by the Consumer Federation of America.

While dressed up in fine rhetoric about "accountability" and "transparency," what Shelby and some of his colleagues are up to is a blatant attempt to thwart effective regulation of the financial industry. They speculate about overregulation stifling economic recovery while ignoring the fact that it was the failure of the old regulatory system that enabled the rampant speculation and predatory lending that tanked the economy in the first place.

Simply put, some senators seem to think they work for Wall Street, not the voters who elected them. Actually, Shelby's House colleague, House Financial Services Committee Chair Spencer Bachus, put it in so many words last year, telling the Birmingham News, "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."

There is one way, and only one way, to break this logjam: The public has to scream bloody murder. The Senate phone lines should be jammed with calls from angry voters demanding that their senators vote to confirm Richard Cordray and that attempts to gut the Consumer Financial Protection Bureau cease immediately.

Call your Senators through the United States Capitol switchboard at (202) 224-3121. Just tell them where you live and they'll connect you. It may be the most important call you make this year.