Thus far in the short and shameful history of Wall Street's meltdown and bailout, the financial services industry has gotten away time and again with adding insult to injury for American consumers.
First it went on an orgy of greed, jiggering profits out of crazy mortgages that helped bring the U.S. economy to near collapse. Then taxpayers had to rescue the banks with billions in handouts, not getting a single public good in return for this huge public subsidy. A million and a half homes have been lost to foreclosure with another 13 million projected over the next five years, unemployment has climbed to 9.5 percent nationally, and bankrupt states are slashing services from cities and social safety nets.
Meanwhile, the banking giants JPMorgan Chase and Goldman Sachs have emerged triumphant, posting new profits and planning business as usual with massive bonuses for executives and millions funneled into lobbying against financial regulation.
For an industry supposedly based on serving consumers' credit needs, their hubris is awe-inspiring as the banks and their hired guns set out to take down the proposed Consumer Financial Protection Agency -- the best thing going for consumers in the Obama Administration's regulatory reform agenda that's now being considered in Congress.
The CFPA, originally the brainchild of Congressional Oversight Panel chair Elizabeth Warren, would be the one independent body charged with looking out for consumers as its core mission. There is currently no single agency in the regulatory system with the sole mission of protecting consumers, and as we've seen, existing regulators failed spectacularly in stopping the abusive lending practices and financial risk-taking that resulted in disaster. No regulator saw its main job as protecting consumers. Instead, the system created incentives for oversight agencies to be even more lax since banks were allowed to choose among four different regulators.
The new agency, which would be created through passage of the Consumer Financial Protection Agency Act (HR 3126), would have broad central authority to police home mortgages, credit cards, debt collection and credit reports, and regulate not just banks but any company that provides consumer financial products, including payday lenders and mortgage brokers.
Bank lobbyists have declared their intention to, if not outright kill the CFPA, at least render it feeble and toothless. They've begun organizing a multimillion dollar advertising and lobbying campaign to pressure politicians and convince the public that we would actually be harmed by potentially higher-cost financial products and fewer "consumer choices" as a result of more regulation.
Their efforts are already starting to bear fruit as lawmakers in the House acknowledged late July that, as a result of opposition to the bill, they would have to postpone work on HR 3126 until after the August recess.
Well, as history has shown, the only way to counter organized greed is to organize people. A national campaign is underway by the National Community Reinvestment Coalition and Americans for Financial Reform, a coalition for consumer and community organizations across the country, to expose the banks' influence peddling and obstruction of desperately needed change.
Here in California, the California Reinvestment Coalition is organizing Congressional district visits with our statewide membership, targeting key representatives who have yet to support regulatory reform legislation. To learn more about what you can do, go here.