Can There Be 41 Jim Bunnings?

As Ryan Grim of HuffPo reports, the Democrats in the Senate are about to make a serious mistake over the proposed Consumer Financial Protection Agency, which was originally designed to have independent authority to regulate the financial industry and keep it from continuing to rip off American consumers.

Let’s hope Barney Frank can stop them.

Chris Dodd, chairman of the Senate Banking Committee, in yet another attempt to compromise with Republicans, has come up with an idea to place the proposed new agency under the umbrella of the Federal Reserve, where it will, no doubt, go to die a slow death.

“I thought that was a joke,” [Frank] said. “Even by Senate standards, that’s mind-boggling.”

In fact, as Frank points out, the Federal Reserve already has the power to protect consumers from unfair banking practices:

The Fed has had authority over consumer financial protection for years but consciously decided not to use it, despite a congressional mandate to do so. In 1994, Congress instructed the Fed to protect consumers from subprime loans, but when Republicans took over in 1995, then-Chairman Alan Greenspan decided he could ignore the directive. The rules weren’t put in place until Democrats retook control of Congress and the crisis was well underway.

Mockingly, Frank continued:

The Federal Reserve is undemocratic, it’s non-transparent, it’s elitist, it’s arrogant: Let’s give them consumer protection.

Grim reported the reason that the Senators are leery of allowing the proposed agency to have independence:

The banks and Dodd’s chief negotiating partners, Sens. Richard Shelby (R-Ala.) and Bob Corker (R-Tenn.) argue that banking regulators must have veto power over consumer protections, because restricting some bank activities could harm the institutions and put at risk their “safety and soundness.”

But Rep. Brad Miller (D-N.C.) wondered aloud how banks could argue that preventing them from ripping off consumers puts them in jeopardy.

“It would be one thing if they were saying, ‘They’re making us do things that will cause us to lose money.’ But they’re saying, ‘If you don’t let us do these things because they’re abusive to consumers, we won’t make enough money to survive,'” Miller said.

“The legislation doesn’t require the banks to offer anything. It would prohibit certain practices. So their argument is, they have to be able to cheat consumers to stay solvent. I’m not sure I’m persuaded by that argument, or that a bank that has to cheat consumers to stay solvent is one we should keep afloat.”

If Democrats in the Senate persist in bedding down with Republicans and giving up on real legislation that would actually curtail some of the practices that led to our near economic meltdown, and if people like Frank can’t stop them, then enthusiasm to keep such Democrats in office will evaporate completely.

We’re getting closer and closer to that as it is, and Democrats have to show, even if they go it alone, that they are on the side of the consumer, and against the big banks, when it comes to practices that clearly are wrong, even if profitable.

Speaking of the Senate, Frank says,

They better vote on this. If they want to kill consumer protection, let there be 41 Jim Bunnings over there.

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