Psst! Hey, you! Yeah, you, in the expensive suit. Listen, Mr. Banker, are you worried that a little oversight and enforcement might be bad for business? I hear ya. I really do. But listen ... hey, come a little closer, pal. I won't bite ya! I got an offer and I don't want to shout it.
What you need is somebody who can fix this problem for ya. Permanent-like, if you catch my drift. And I think you do. You don't have to get your hands dirty, neither. I know a guy who knows a guy... in fact, he knows a lot of guys.
Here's his number. He'll handle it real discreet-like. I know, I know. You don't want your name drawn into this. You like giving those interviews where you play the wise statesman and complain that people aren't nice enough to folks like you.
No, no, that's not how you say it! It's spelled B-O-E-H-N-E-R, but it's pronounced "Bay-ner." He'll be waiting for ya on K Street. Can't miss him: Orange tan. Cries a lot. Likeable as all get-out. Even the Big Guy says he can "do business with him."
Don't worry, pal. Johnny'll get the heat off your back before ya even know it. I know the right folks. We got that Warren lady outta the way this week, right? Now as for that little "bureau" of hers -- well, stuff happens, right? There could be a fire, maybe, or an accident. Or maybe some kinda new law, I dunno. Johnny'll think of something.
Say hello for me when you see him -- and don't forget to bring your wallet.
Yesterday the House passed H.R. 1315, and the normally humor-challenged Republicans showed unusual wit by naming it the "Consumer Financial Protection Safety and Soundness Improvement Act of 2011." That's like naming the German U-boat flotilla the "Improved Safety and Soundness Fleet for Ocean Travel of 1941." The bill actually weakens our economy's safety and soundness, even as it helps banks prey on consumers. U-boats were designed to sink ships, and this bill was designed to torpedo consumer protection.
Democrats originally proposed a Consumer Financial Protection Agency, but Republicans dug in their heels and demanded that it be downgraded from a stand-alone agency to a bureau, housed within the notoriously bank-friendly Federal Reserve. How bank-friendly? As the GAO reported this week, Fed officials gave $16 trillion in secret loans to American and foreign banks and was rife with conflicts of interest. Fed executive William Dudley was allowed to keep personal holdings in AIG and GE Capital as his institution was bailing them out. JPMorgan Chase Jamie Dimon -- who seems to spend every other hour complaining that people say mean things about bankers -- was on the board of the New York Fed while the Fed was giving his bank $390 billion in financial assistance.
So Republicans won a huge victory by downgrading the CFPB and housing it within the Fed. (That deal was worked out with Sen. Shelby, who voted against Dodd/Frank anyway.) They won another huge victory when they put its rulemaking authority under the supervision of a council comprised of heads of other agencies, many of whom have also been subservient to the big banks.
But the Bureau is still capable of doing some very good things, and that's what this bill is designed to stop. Under current law, the oversight council can only reject a CFPB regulation if a tw-thirds majority concludes that it threatens the safety and soundness of the U.S. financial system. This law would allow the council to veto a CFPB regulation with only majority, if that regulation "is inconsistent with the safe and sound operations of U.S. financial institutions. "
"Financial system" means the entire banking economy -- that is, the economy itself. "Financial institutions" means "the banks." So they're not just removing the requirement for a two-thirds majority. They're saying that the council must veto a regulation if it threatens the "sound operations" of a bank -- that is, if it's bad for business.
Presumably this rule means that regulators could not have stepped in during the savings and loan scandal of the 1980's, because preventing their destructive crime wave would have led to their bankruptcy. (Which came later, along with a wave of prosecutions that contrasts sharply with their absence this time around.) The spirit of Charles Keating is alive and well and walking the halls of Congress. In fact, his "Keating Five" now numbers in the hundreds. And now, as then, it includes members of both parties -- that is, it includes some Democrats and virtually all Republicans.)
That's not all that this bill does. It would also eliminate the office of Bureau Director and replace it with a five-person committee. Why? Because organizations are much more effective when there's a single leader, and because that leader would become a spokesperson for the American consumer.
And that could be bad for business.
It's a brilliant way to subvert the agency, when you think of it. How did they think of it? Picture the scene: Republican politicians and bank lobbyists are sitting around a table in some Georgetown penthouse, having a few beers and kicking ideas around while a TV plays in the background. "How?" they ask themselves. "How can we paralyze this bureau?"
Suddenly the last scene from Reservoir Dogs comes onto the television, the one in the warehouse where the gang members argue, points their guns at one another, and then start blasting until everybody's dead. One of the Republicans drops his drink, stands up so quickly that the lobbyist on his knee falls to the floor, and shouts at the others: "I've got it!"
The Republicans explained that the ruling committee would be bipartisan (because, you know, that whole "bipartisan" thing has worked out so well for ordinary people so far). That can lead to only two possible outcomes: that it will be hopelessly deadlocked, or that bank-friendly Republicans and bank-friendly Democrats will team up to ensure that Wall Street's interests are well protected.
Of course, perhaps the Republicans really believe that committees are more effective than executives. I'll believe that when every Republican governor in the country turns their executive responsibilities over to a five-person committee. Until then we'll have to presume that their objective is to mire the CFPB in confusion, gridlock, and confusion. This act of subversion runs against public opinion,which is heavily in favor of the Bureau. But they're counting on Wall Street's fat campaign contributions to buy the ads that will insulate them form any blowback at the polls.
H.R. 1315 passed yesterday, on the one-year anniversary of Dodd/Frank's passage. It turns out that the House Republicans don't just have a droll sense of humor. They're sentimental, too.
Psst! Mr. Banker! I'm over here, in the shadows.
Didn't I tell ya Johnny would come through for ya? Yeah, he sure did. Glad you feel that way. If you're happy, I'm happy. What's that? You wanna make sure you keep paying these super-low taxes we fixed up for ya? No sweat. Johnny's boys can fix that for ya, too, if you don't mind hurting a few old people.
Thanks for the envelope. There's a bonus, too? Thanks! It's a pleasure doin' business with ya, pal, a real pleasure.