The Sound of Sensibility: Financial Reform at Last?
What was that happy sound we heard from Washington this week? Could it be -- the Sound of Common Sense?
New legislation was proposed this week by Senators Schumer, Durbin, and Kennedy for some revamping of the financial system. Hold onto your hats (and your wallets), this doesn't involve more bailout money. It actually costs the taxpayer next to nothing.
The proposal? A Consumer Financial Product Commission. Yes, it could use a flashier name. (How about a contest to Name That Commission?) But if done right, this could quietly (and cheaply) overhaul our financial regulatory system.
Since the early 1980s,regulation over consumer financial products has gotten weaker and weaker. Caps on interest rates were tossed out, regulatory agencies were stripped of authority, and a game of "regulatory shuffle" ensued whereby banks re-incorporated at will, with whatever agency would approve the most trash.
Right now, there are virtually no consumer protections for financial products. We have protections for everything else we buy: Government agencies are always on the lookout for faulty seatbelts, dangerous drugs, or lead in kids' toys. But when it comes to financial products, it's strictly "buyer beware." If a mortgage product has a 1 in 5 chance of sending you into foreclosure, or if a credit card has a provision that even a Wall Street lawyer can't understand, that's just too bad. No one is looking out for the customer.
This could be the first real step to reverse that trend. Hats off to some common sense.
Recently, a cigarette case was decided in favor of the plaintiff, in spite of numerous warnings on the product. Toy lead rules have just decimated inventories of motorcycles. The FDA currently keeps experimental drugs offering hope, away from terminal patients. And no new nuclear plants have been built in 30 years because of regulatory hurdles.
Meanwhile all the regulatory agencies that could have forestalled this financial mess were denied, stalled, or circumvented. Sometimes personal responsibility has no substitute.
March 13, 2009 8:55 PM | Reply | Permalink
shooter, shooter, shooter,
I'll address just one of your rants; "And no new nuclear plants have been built in 30 years because of regulatory hurdles."
Are there regulations? Sre there are, but they aren't the reason for a lack of new construction.
While working on his energy program back in 2001/2002 Cheney claimed "No nuclear power licenses have been issued in 25 years." Well that's because no one applied for a license.
25/30 years brings us back to what? Three Mile Island.
Nuclear plants face extremely large, almost prohibitive, initial construction investments, but that's just the start, fact is, no one wants to insure them, that's why Republicans in Congress want the Taxpayer to subsidize this insurance. (My God, shades of Socialism!) And lets not forget the location controversy where NIMBY comes into play.
Its interesting how you ignore these problems and fall back on the "regulatory hurdles" staple of the right.
March 14, 2009 9:46 AM | Reply | Permalink
Yes to Shooter and his personal responsibility solution - it's just too bad his "president" of the last eight years didn't have any of it, nor did his administration.
In fact, Shooter's administration of the last eight years intentionally withdrew oversight responsibility from the federal government as much as they thought they could get away with it.
Perhaps Shooter should show some personal responsibility in which candidates he chooses to support, at least if he's really serious about it. If not, then you know he's just the crank we all know and laugh "with".
March 14, 2009 5:54 PM | Reply | Permalink
Actually Bush tried to head off the mortgage excesses and was denied by Barney Frank and Maxine Waters. Try and keep up with events please.
Meanwhile back at the voters booth I went for Obama this time around. Hmmmm, debt, hmmmm.
March 15, 2009 8:47 AM | Reply | Permalink
shooter,
when and how did Waters and Frank do this?
March 15, 2009 10:36 AM | Reply | Permalink
Live and in color.
http://www.youtube.com/watch?v=_MGT_cSi7Rs
March 15, 2009 11:55 AM | Reply | Permalink
shooter,
you just indicted yourself with that video.
First, Franklin Raines shoud be in jail.
Secondly, note the committee chairman, he's a Republcan which means Republicans had control of Congress which also means uber conservative Tom 'the Hammer' DeLay was majority leader. So tell me, how these black liberal congressmen and the that gay liberal from Taxachussetts, Barney Frank, were able to bend Tom Delay to their will and force him and the Bush/Cheney gang to engage in "mortgage excesses"?
March 15, 2009 4:20 PM | Reply | Permalink
LOL. I wasn't there so I don't know the details, but it happened. Reform didn't go forward. Race card? Waving the flag? Intimidating enough votes to make no decisions? Take your pick.
Rather than defending the inquisitors, you should focus on their incestuous relationships with Fannie and Freddie.
March 16, 2009 9:48 AM | Reply | Permalink
shooter,
if the Democrats kept "reform" from going forward how did they manage this at a time when Republicans controlled both houses of Congress and the White House?
March 16, 2009 10:07 AM | Reply | Permalink
Right. Apparently the French really do something better than we. Besides fries. Did you know they store their nuclear waste underneath the Hague?
March 15, 2009 8:49 AM | Reply | Permalink
shooter,
stop hiding beneath your desk and address my post.
March 15, 2009 10:35 AM | Reply | Permalink
John as a socialist you just don't get the gotcha nature of regulatory bodies.
Here's a story of some poor soul that poured his resources into a store relying on regulatory staff assurances it wasn't money wasted. At the last second his permit was denied. Now imagine that scenario with $billions spent. In short, regulatory agencies can't be trusted.
http://www.outsidethebeltway.com/archives/alexandria_sex_shop_revenge_for_zoning_controls/
And something a little more factual....
http://www.heritage.org/Research/EnergyandEnvironment/bg2086.cfm
March 15, 2009 12:10 PM | Reply | Permalink
shooter,
why is it that whenever you source its always a right wing capitalist organization like the Heritage Foundation? You can't find any objective analysis?
You call me a "socialist" I call myself a successful small businessman who became an electrician and built an electrical contracting company that my sons now run.
As to the regulations and your sex shop example,
well, one good anecdote requires another, though more tragic.
I was once called to a house where a 2 year old girl was electrocuted after she stepped on an outside conduit that was energized and not buried far enough. This outside wiring job was done by someone who ignored the code, and it was never inspected by a Government "bureaucrat" who would have enforced a "regulation", thereby keeping the girl from dying.
March 15, 2009 4:11 PM | Reply | Permalink
I should have added the pipe also wasn't grounded properly.
March 15, 2009 4:24 PM | Reply | Permalink
Objective analysis? From who, the Sierra Club? If you don't like it, get your own.
So what. That certainly hasn't detered you from voluminous opinions about what other people should do with their money, and/or conservative politics. Chavez in Venezuela runs the oil industry, communications and recently the food stocks, but no one denies he's a socialist.As for the girl, yes that's tragic, and has nothing to do with investing billions, hoping and wishing for a positive outcome. This isn't about wiring a hot tub.
March 16, 2009 10:06 AM | Reply | Permalink
My beef with those against excessive "regulation" is that, although they claim that we'd be better off without regulations, the first defense of those caught after egregious acts is that they did nothing illegal, i.e, there was no law (or regulation) against it.
March 14, 2009 3:23 PM | Reply | Permalink
My beef is that the regulators that could have prevented this, failed. They didn't do their jobs. The financial system doesn't need another layer of regulation. It needs the original layer to function as designed.
March 15, 2009 8:52 AM | Reply | Permalink
A thousand thanks Amelia Tyagi for the headsup.
That said, - sharpen your pitch forks and prepare any, and all other "implements of destruction", and gather en masse around the homes and offices of the predator class thieves and swindlers who conjured PONZI schemes, profited wantonly from those PONZI schemes, destroyed the global financial system as result of the malfeasance and perfidy of those PONZI schemes, - and now complain of meaness from the other 99% of the population. The other 99% of the population that has suffered real pain and real injury in the form of lost jobs, diminished incomes, benefits reduced or erased entirely, homes lost, hopes dashed, and palpable measurable devastating losses.
When thousands of unemployed and desperate mothers and fathers, and sisters and brothers of deprived children and hungry thirsty grandparents are assembled around the oppulent palace walls of the predator class, "implements of destruction" glimmering in the light of the glowing sun, and the reflection of the shimering moon - then and only then will the predator recognize and appreciate the inconvenient truth that there will be blood, and a reckoning and a balancing.
In a world where there are no laws, - there are no laws for anyone biiiaaatches!!!
a reckoning, and balancing.
March 14, 2009 4:25 AM | Reply | Permalink
There is nothing wrong with our financial system. The problem is people. Stupid selfish people run our financial system.
A new commission will only waste money on top of all the money already wasted by the SEC and other bogus watchdogs.
I am not proud of homo sapiens lately.
March 14, 2009 9:41 AM | Reply | Permalink
And how about dumping the adjustable interest rate? This atrocity was established, in part, to help banks recoup big losses on international development loans they'd made to deadbeat foreign dictators in the '70s. For too long, banks and lenders have used the American consumer as a hapless piggy bank, as insurance against their own incompetent and corrupt practices.
March 14, 2009 1:25 PM | Reply | Permalink
I'll believe it when I see it. If this happens it'll be another watered down piece of crap that likely won't achieve even half of what is needed.
What congress calls a compromise is nothing less than an evaluation of the degree with which a law screws the majority.
Any more the notion of a majority does not refer to citizens but rather is a reference to who has the most money.
March 15, 2009 3:18 AM | Reply | Permalink
Wow, a proposed commission! Economic crisis solved! Excuse the snark, but though it may be a good idea, the system's failures are pretty clear already.
Just curious, and not questioning your credentials in economics or as a consumer advocate, but how did your post become a front page TPM post after falling off of the “Readers’ Posts" without comment? Was it posted to the wrong place the first time? I'm just wondering about the process.
March 15, 2009 4:01 PM | Reply | Permalink
Thanks for sharing this blog! A real financial reform is really important these days because a lot of people are losing their jobs because of foreclosure procedures. Not only jobs are lost but also their mortgages and homes. Foreclosure is a lengthy and expensive process that can cause a loss on the part of the lender with the current state of the economy. There are more homes being sold, than homes which are being bought – and therefore homes may sit on the market for months before being sold. Acting early can be the best way to deal with an overwhelming mortgage payment. . If you can do so, then getting a cash advance to stem it off isn't a bad idea. Refinancing, lowering monthly payments and interest can give a bit more breathing room as well. In today's economy, it is most definitely in your best interest to do whatever you can, including getting a cash advance to stem off foreclosure.
April 13, 2009 11:26 PM | Reply | Permalink