The Real Wolves of Wall Street

It’s hard to make a serious argument against an agency that’s returned over $11 billion to more than 25 million Americans scammed by their financial companies. Especially when that agency, the Consumer Financial Protection Bureau, enjoys broad public support across party lines for its efforts to crack down on debt-trap loans, credit card overcharges, illegal debt collection practices and discriminatory auto lending.

That’s why the big bank lobby and its allies in Congress had to contort themselves last week to justify their attempts to hamstring the bureau. Luckily for the rest of us, their farfetched talking points didn’t sway the bureau’s defenders in Congress, and their attack fell flat.

The House Financial Services Committee was considering legislation to change the way the CFPB is led, putting it under a five-member commission – a recipe for partisan gridlock and increased industry influence – instead of a single director. The White House, along with more than 75 consumer groups, spoke out against the move. The major architects of financial reform, including Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., as well as Sen. Elizabeth Warren, also a Massachusetts Democrat, and former Rep. Brad Miller, D-N.C., made it clear that they too opposed it.

While the bill ended up passing, as expected, it did so essentially along party lines. Only two Democrats, Reps. David Scott of Georgia and Kyrsten Sinema of Arizona, voted in favor with all the committee’s Republicans – despite a major effort by Wall Street lobbyists. For weeks, they’d been telling reporters about a supposed wave of mounting support for their “bipartisan” measure, getting congressional allies like Rep. Tom Emmer, R-Minn., to spread the word in the press.

The very obvious intent of their proposal is to impede the consumer bureau’s ability to fight against abusive financial practices. To distract attention from this inconvenient truth, the bill’s defenders resorted to scaremongering. House Financial Services Committee Chairman Jeb Hensarling of Texas equated single-director leadership with North Korea, while Rep. Sean Duffy, R-Wis., called it “the Stalin model.” Both failed to mention that it was Republicans who called for a single director to head the Federal Housing Finance Agency, created in 2008, or that another bank regulator, the Office of Comptroller of the Currency, has functioned with a single director since 1863 with no calls from Congress to change it.

In the effort to gain support beyond the ranks of the usual Wall Street-friendly suspects, a few of the bill’s proponents even professed to be looking out for consumers’ interests to protect them from a hypothetical weak consumer bureau director appointed by a hypothetical future president. No actual consumer advocates have ever expressed such a concern, however: They know that an effective director some of the time is far better than a milquetoast commission all of the time.

The real impetus for this legislation comes, very obviously, from the financial industry lobby, which wants the change because it will make it easier for banks, payday lenders and debt collectors to engage in unfair, deceptive and abusive practices. And the industry is willing to spend huge amounts of campaign and lobbying money to get its way.

In 2010, Wall Street expended over $1 million a day seeking to block reforms, including the creation of the consumer bureau. That extraordinary rate of spending has continued, according to an Americans for Financial Reform report that covered the 2014 election cycle. A more recent report from the consumer advocacy organization Allied Progress shows that eight members of the House Financial Services Committee received donations from the payday lending industry within weeks of endorsing a previous attempt to subject the consumer bureau to rule by commission.

Last week, six major banking industry lobbyists did us all a favor by signing their names to a joint op-edopenly advocating for the commission bill. They claimed that they, too, were worried about what might happen, under continued single-director leadership, to “the [consumer bureau]’s work over the past four years.” Hearing that absurd argument from the leaders of trade associations that have opposed the bureau on issue after issue over the past four years made it clearer than ever that the push for a commission is just another piece of the industry’s strategy to roll back reform and revert to the unregulated havoc that brought us the financial crisis.

Warren put it best, telling The Huffington Post, “Give me a break – this is the wolves saying all they care about is Grandma.”

Of course, they won’t give us a break. The wolves of Wall Street will keep on trying to obstruct the consumer bureau’s important work in any way they think they can. But now more people will understand what’s at stake, and we can expect more people in and out of Congress to speak out and fight hard when this bill moves to the House floor and if and when it advances any further.

— Jim Lardner

Originally published on USNews.com

New Project Helps Bank Workers Blow the Whistle on Corruption and Abuse

New Whistleblow Wall Street Project

October marks the seven year anniversary of the passage of the Troubled Asset Relief Program (TARP), which bailed out the financial sector during the 2008 economic meltdown. Given that the nation’s biggest banks have only gotten larger since the financial crisis, accountability in the financial sector is more important than ever, and Wall Street’s employees can be a crucial part of making that happen. That’s why it is good news that an alliance of workers, advocates, and lawyers have come together to launch Whistleblow Wall Street, a new website that will make it easier to expose wrongdoing in the banking industry.

The website, which is a project of the economic justice non-profits The Other 98% and The Rules, aims to help bank employees learn about their rights as whistleblowers, find legal representation, and includes an encrypted secure drop to anonymously share information.

The 2010 Wall Street Reform and Consumer Protection Act created new protections for whistleblowers, including prohibitions on retaliation. But even with these new safeguards, it can be hard to figure out what to do with information about misconduct. So as a part of the launch, the Government Accountability Project, a not-for-profit legal organization specializing in whistleblowing cases, has volunteered to help anyone who is considering blowing the whistle, or who has already blown the whistle and needs help because of reprisal.

To draw attention to the campaign, a series of billboards are going up throughout the financial district in New York encouraging Wall Street employees to blow the whistle on abuse and corruption in their firms, with the message “See Something? Do Something!”. In addition, members of the Committee for Better Banks – a coalition of bank workers, advocacy and labor organizations working to improve conditions in the financial industry – will be handing out leaflets at financial centers in New York City, Washington D.C., St. Louis, and Orlando.

Former CitiBank executive Richard Bowen, who himself blew the whistle on subprime mortgage fraud, has urged fellow financial sector employees to not give in to “fear or a misplaced sense of company loyalty,” but instead to “Please, say something! Show personal integrity and report behavior that may be harming others.” The Whistleblow Wall Street platform aims to empower workers like Bowen to speak up when they see wrong-doing, so they can be part of making sure that abuses like those that that led to the last crisis are not allowed to flourish unchecked.

Reforming the Federal Reserve’s Bailout Authority

Senator Elizabeth Warren speaking at Cato/AFR event on reforming the Fed's bailout authority
On September 16th, Americans for Financial Reform (AFR) joined Senators Elizabeth Warren (D-MA) and David Vitter (R-LA) for an event at the Cato Institute about reforming the Federal Reserve’s bailout authority. The discussion focused on the Federal Reserve’s unprecedented use of its Section 13(3) emergency assistance authority to provide trillions of dollars in low-interest loans to Wall Street banks during the crisis, as well as the new limits put on that authority in the Dodd-Frank Act.

AFR's Policy Director Marcus Stanley speaks about reforming the Fed's emergency lending powers.

AFR’s Policy Director Marcus Stanley speaks about reforming the Fed’s emergency lending powers

The first panel, moderated by Ylan Mui of the Washington Post, featured AFR’s policy director Marcus Stanley, and Phillip Swagel of the University of Maryland.

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