So reports the New York Times:

Having passed the Dodd-Frank Act earlier this summer, the bill that aspires to reorder our financial universe in the wake of the most serious economic crisis in generations, Congress has moved on to other matters. Regulators are left to write the rules that will make financial reform a reality — or not — and are beginning that laborious process. ..

The question is this: Will regulators give Wall Street’s big dealers what they want in a second bite of the apple?

There is no doubt that regulating the freewheeling derivatives market is important work. If done right, heightened scrutiny could well eliminate the potential for another disastrous bank run like the one that threatened world markets in September 2008 when the American International Group imploded. The insurer had written insurance on mortgage securities— a derivative known as a credit default swap — and almost collapsed after, among other things, onerous collateral calls from its trading partners drained its cash...

“It is again going back to the battlefield, and this is a much more complicated battlefield...”

“There is going to be so much pressure from the biggest financial institutions not to have limits,” said Heather Slavkin, senior policy adviser of the A.F.L.-C.I.O.’s Office of Investment and a participant in the Aug. 20 meeting. “Regulators are going to be very much focused on what types of swaps get cleared, so the governance and ownership aspects that are just as important may not get the attention they deserve.”

It's not over yet. We must continue to hold the regulators accountable and ensure that they follow both the letter and the spirit of the Wall Street Reform law.

We did it. We passed Wall Street Reform. Now, lenders are no longer rewarded for bad behavior:

It has become fashionable to blame profligate borrowers for the calamity. And there is no question that in the madness of the housing bubble, some people should never have sought mortgages or bought homes they clearly couldn’t afford. But the crisis was driven by Wall Street’s hunger for quick profits and its eagerness to buy mortgages and package them into securities. Banks, mortgage companies, brokers and appraisers all conspired to steer borrowers into loans with escalating interest rates, balloon payments and other conditions that made them highly prone to default.

The new law does not ban risky loans outright. It does establish several conditions that, if correctly implemented, should discourage lenders from issuing them.

Lenders must now take the common-sense precaution of documenting the borrower’s ability to pay. They can no longer penalize borrowers — eager to free themselves from subprime or other risky mortgages — for paying off the loans early. And lenders are forbidden to pay kickbacks — “yield spread premiums” — to brokers who push borrowers into costly, higher-interest loans.

If loans violate the law, borrowers will be able to stop a foreclosure and sue to recover damages. The risk of being hauled into court should persuade investors to look closer at the underlying loans to make sure that they conform with federal law.

These are all good, and desperately needed, reforms. Industry lobbyists, who do some of their best work in the rule-making phase, will work hard to water them down.

Consumer advocates are especially worried about how the Fed will formulate the rules that are supposed to stop lenders from steering creditworthy minority or female applicants into more expensive mortgages and end “wealth stripping,” under which lenders design loans that quickly rob homeowners of their equity.

Congressional leaders believe that the Fed was chastened by the crisis and will now do all that is needed to protect lenders. Given the agency’s long history of kowtowing to the banks, mortgage lenders and credit card companies, Congress will need to do more than trust. It will have to verify that the new rules finally give consumers — and the American economy — the strong, permanent protections they need.

It's time for the Fed to step up. And, if they don't, they must be held accountable.

Another powerful voice for Elizabeth Warren. This time, it's noted Law Professor Norm Silber of Hofstra and Yale Law Schools. Professor Silber also holds a Ph.D in history and is a specialist in the history of the consumer movement. Professor Silber:

The tone reflected by the news stories proceeded much like this:

Landmark legislation can finally protect the public from hidden dangers which might happen to any of us any day. For the first time we have the real prospect that products will be safer and that we will know more about the dangers in store. But this can happen only if the new Agency has an independent and assertive start under an experienced leader with loyalties that run toward the public interest, and not toward special interests who have from the start tried to kill the new authority. The new director will, for better or worse, personify the strength of this new effort. There can hardly be any doubt about who the head of the new agency should be. The question is who will it actually be?

This might sound like today’s debate over the choice of the new director of the Bureau of Consumer Financial Protection—but it is a more accurate reflection of the drama that played out a century ago, in 1906, when the first director of what became the Food and Drug Administration was selected by President Teddy Roosevelt.

The obvious best choice was the famous chemist Dr. Harvey W. Wiley. Beginning in 1882, Dr. Wiley opened up the fight for a Pure Food and Drug Law. Wiley and his “poison squad” of employee-volunteers at the Bureau of Chemistry, in the Agriculture Department, served as “human guinea pigs,” by eating canned soups and preserved meats, publicizing their frequently dangerous ingredients in news stories and scientific journals. By 1906 public respect for Wiley’s qualifications and for his independence from the prepared food manufacturers distinguished him. Congress turned to this chemist in the Agriculture Department to become the first official responsible for enforcing the Pure Food and Drug Law.

Although Dr. Wiley lost a number of battles—and over the years was charged by opponents with biases of his own—he built a skilled and independent, empirically oriented staff. During the crucial initial years, in particular, he built a strong foundation for a great agency that sustained it for the twentieth century. Only in more recent years, as drug companies have exercised greater influence over appointments and the agency’s budget, have questions about the FDA’s independence begun to stick.

Last month, Congress created an independent regulatory body within the Federal Reserve System, a body designed to address consumer financial products. The near-collapse of the banking system, and the economic and human devastation resulting from a dysfunctional lending market,precipitated this reform.

Echoes of the Wiley drama resound in this modern controversy. The question today is whether Professor Elizabeth Warren of the Harvard Law School and Chair of the TARP Congressional Oversight Panel should be appointed (by the President, with the advice and consent of the Senate) as the first Director of the new Bureau of Consumer Financial Protection.

In Wiley’s tradition, Professor Warren conducted empirical research and policy-oriented scholarship to demonstrate the consequences of defective products and deficient regulation. She appeared in documentary films about personal tragedies hastened by under-regulated credit card agreements, and conceived of the new consumer agency to address the matter. She criticized the insufficient use of TARP funds to help homeowners directly. She encouraged legislators to retain the new Bureau as part of the financial reform package.

A comparison between these two reform efforts, a century apart, leads us to consider what skills and qualities a first director should have; and what role those who stand to be regulated should play in the process of choosing their own regulator.

Would the launch of the new Bureau be enhanced by choosing one who helped define its mission and regulatory objectives? Would public confidence be diminished irretrievably if the director is chosen by the affected industry or its allies? Has devotion to the creation of this Bureau compromised Warren because of doubt cast on her detachment and objectivity?

The choice of Wiley greatly enhanced the profile of the FDA as it began its life. Blocking Wiley’s appointment—even if it had led to another, excellent and independent voice—would have demonstrated the persistent muscle of the affected industries, and would have suggested that enforcement and rulemaking authority also would be subject to interference. How much less effective a century of food and drug regulation probably would have been if the food industry played a major role, or exercised a veto, in selecting the first head.

Wiley was perceived as holding a special “bias”. He appeared to care more for the safety of the food supply than for extending product shelf-life of food or the profits of industry. When the manufacturers of such preservatives as borax or additives such as benzoate of soda cried out about economic realities, Wiley typically countered by discussing the danger to one’s kidneys or liver. His response was not perceived as being biased—it just seemed he had a more balanced set of priorities. Today when the economic importance of such innovations as credit card teaser rates have been pled, Professor Warren has countered by addressing the impact of particular debt arrangements and fees on the financial survival and confusion of individual consumers.

In short, there is no substitute for leaving the launch of a new Agency in the hands of those who understand the importance of its mission and care for its future. If the Bureau of Consumer Financial Protection is to be what most of the public hopes for, it should get off to an independent start with a director who is chosen without an industry-encouraged compromise and who is broadly identified with its crucial mission.

This is an historic agency. And, we need to launch it with an historic leader. That leader should be Elizabeth Warren.

On Wednesday, Public Citizen delivered 15,000 petition signatures to The White House calling on them to appoint a true consumer champion, Elizabeth Warren, to lead the Consumer Financial Protection Agency. Watch:

The people-powered pressure is building. Our efforts helped pass Wall Street Reform. Now, they're helping to put a true Wall Street Watchdog on the job.

First, Connecticut Now reported this:

Senator Says He'll Support Her As Financial Protection Chief If Obama Names Her

Then, TPM reported:

Dodd Reverses Position, Suggests Warren May Not Be Qualified To Head Consumer Bureau

Chris Dadd should stand for Main Street, not Wall Street.

Our friends at Americans for Financial Reform give us some helpful tips on what we can do right now to help get Elizabeth Warren nominated:

Here's what you can do to show your support for Elizabeth Warren, the ideal candidate for head of the CFPB:

• Send a letter to President Obama, letting him know you want Elizabeth Warren in that seat.
• Sign The Progressive Change Campaign Committee's petition in support of enabling Elizabeth Warren to police Wall Street.
• Sign Public Citizen's petition in support of appointing Elizabeth Warren as the watchdog Americans need.
• Sign Ilan Moscovitz's (of The Motley Fool) petition to show that you agree that America needs Elizabeth Warren's "charisma, vision, and passion to get the job done."
• Join Politico‘s online debate and voice your support for Elizabeth Warren.

And, of course, you can watch this new video and pass it on to your friends...

Wall Street is pouring money into the campaign coffers of the Republican Party. The Republicans stood up for Wall Street on Capitol Hill, and, Wall Street is paying them back:

Financial firms and the people who work for them are increasingly donating their political cash to Republicans, according to a preliminary Center for Responsive Politics analysis of second-quarter federal campaign finance data.

The Center's preliminary study indicates that political action committees and individuals associated with the broad finance, insurance and real estate sector have given more money to federal-level Republican interests during every month since December. The gap continued to grow during that time, reaching its widest point in June...

Contribution trends toward Republicans is particularly pronounced in the securities and investment industry, the Center finds...

The Republicans stand up for Wall Street. So, Wall Street is standing up for the Republicans.

New York Communities for Change has launched an innovative campaign to keep Americans in their homes: keep people in their homes, or else. They introduce the campaign:

We all know the Big Banks triggered the forecosure crisis in this country through predatory lending practices. Now they have the power to fix it - by working with families facing foreclosure, these banks can modify their loans to allow them to make payments and stay in their homes. But the Big Banks refuse to do this. It's time to send the banks a message - change your ways, or we move our money.

Fill out the form below to send an email to the CEO's of the Big Five - Chase, Citi, HSBC, B of A, and Wells Fargo, letting them know that if they don't improve their loan modification policies by August 31st, YOU will move your money to another bank and refuse to do business with any of these five.

Take the pledge. And, help keep Americans in their homes.

Elizabeth Warren is a blogger who is well respected by conservatives and liberals alike. She's a wonk through and through who understands the incredibly complicated framework that is the global financial system. Zach Carter has the story:

Of all the accomplishments Elizabeth Warren has amassed during her lifetime, one of the most impressive is also one of the least well-known to the general public. Warren was a co-founder of Credit Slips, a very technical, influential blog on banking and bankruptcy. She hasn’t blogged there since taking up her post as Chair of the Congressional Oversight Panel for the Troubled Asset Relief Program, but a review of her posts reveals a set of truths that Warren’s opponents in the bank lobby do not want to acknowledge. While Wall Street bankers like to smear Warren as an ideologically driven crusader, Warren’s blogging reveals her to be the exact opposite: a serious student of economic evidence, eager to embrace good ideas from any source.

Take a look at this post from September 2008, in which she praised economists Greg Mankiw and Ken Rogoff. Both of these economists are, let’s say, unpopular among liberals. Mankiw was chair of President George W. Bush’s council of economic advisors, and Rogoff is an alum of the International Monetary Fund, where he pushed draconian cuts in social programs in developing nations in the name of balanced budgets.

But it turns out that both Mankiw and Rogoff had something interesting to say at a forum back in September 2008. And what did Elizabeth Warren have to say about it? She calls them “interesting,” “terrific,” “calm,” and “funny.” She doesn’t blast them for their backgrounds with institutions that are generally reviled by progressives, she just emphasizes that they’re serious thinkers who are making good points about the role the bank bailout played in the economy:

Greg’s work with the current administration and Ken’s background with the IMF and on the Board of the Federal Reserve add a certain credibility to their assessments of conditions on Wall Street. If they are right, the $700 bailout is saving some investment bankers’ jobs in the short term, but overall it is just making the financial system worse.

Aside from seeking out common ground with aggressive conservatives, Warren also displays a deep-rooted intellectual curiosity throughout her blog postings. One of the most obnoxious bank-lobby smears against Warren is that she doesn’t fully appreciate the benefits of financial innovation, and that she’ll cut off useful credit to poor people by pushing overzealous consumer protection. Even some otherwise respectable bloggers have taken up the chant, without really bothering to investigate whether there’s any shred of truth to it. Even a casual browsing of Warren’s blog work reveals this to be a silly charge.

In a post from May 2008, she details a Wells Fargo customer who was quite clearly ripped off by her bank. Warren provides a very cautious analysis of the situation. While Wells Fargo’s actions were an obvious disgrace to the bank itself and the regulatory regime, the appropriate response is not obvious. Maybe the kind of product Wells Fargo was selling should be banned outright. Maybe it should only be provided with more rigorous disclosures. Maybe consumers should have to ask for the product before bankers are allowed to discuss it. The point is, Warren isn’t eager to claim that an obviously abusive product should simply be banned—she wants to make sure that policymakers don’t unnecessarily cut off credit to well-informed adults who want it.

Again and again, Warren reveals herself to be a devout student of data in her blog work. It isn’t sexy, it sure as hell doesn’t traffic in the broader blogosphere, but it’s the mark of someone who truly cares about getting it right, rather than merely developing a set of popular talking points. Warren clearly loves reading economic papers on the effects of various credit policies, and determining their effects on both individuals and society at large. That’s exactly what we need from a bank regulator, especially at the Consumer Financial Protection Bureau.

Warren has all the momentum, but, it's going to take people power to put her over the top. Speak out, contact the White House and voice your support for Elizabeth Warren.

People power keeps Edda Lopez in her home and causes Bank of America to stand down. Watch the inspiring story:

In yesterday's Washington Post, Harold Meyerson makes the case that an Elizabeth Warren appointment to the CFPA is good for small business:

But there's another way Democrats can assist small business besides continuing to press for their small-business stimulus. The president can choose a champion of small business to direct the newly created Consumer Financial Protection Agency. He can nominate Elizabeth Warren.

To date, we have heard chiefly that the big banks look askance, and then some, at the prospect of Warren heading the agency. She is among the nation's leading critics of the credit card rip-offs that big banks have long inflicted on cardholders as a matter of policy. Precisely for this reason, she stands out as a small-business hero, because in the absence of bank lending, small businesses increasingly are turning to credit cards as a source of funding or operating revenue. Fully 83 percent of small businesses, the Federal Reserve reported in May, use credit cards. Three-quarters of small businesses that apply for business credit cards secure them, according to a 2010 survey from the National Federation of Independent Business, while just 39 percent of bank-loan applicants obtain loans. A 2009 study from the National Small Business Association concluded that 59 percent of small businesses used cards to meet their capital needs.

Bank loans to small businesses have been increasingly supplanted by bank credit cards. And no one is more expert that Warren on how banks exploit their cardholders. She is, by common consent, one of the leading academic authorities on the topic as well as a passionate advocate for getting cardholders a fairer shake.

Enemy of Wall Street? When necessary, absolutely. Friend of Main Street? None better. If he nominates Warren and can get her confirmed, President Obama will have found one more way to aid American small business.

America's small businesses need help. They're the job creators. Their innovation drives America. We need an advocate like Elizabeth Warren at the head of the CFPA!

...that's how much Wall Street spent trying to defeat and water down real reform.

The financial industry has spent $251 million on lobbying so far this year as lawmakers hammered out new rules of the road for Wall Street, according to the latest lobbying reports compiled by a watchdog group.

The financial sector spent more than any other special interest group from April through the end of June -- a whopping $126 million, according to the Center for Responsive Politics' latest estimates. Wall Street banks, as well as insurance and real estate firms, hiked the amount they spent on lobbying by 12% in the second quarter compared to the same period last year.

"Financial reform certainly drove Wall Street lobbying efforts," said Dave Levinthal, spokesman for the Center for Responsive Politics. "Even as the economy remains beaten and bruised, with some financial institutions continuing to struggle, most banks and securities houses found it in their budgets to hire lobbyists - and lots of them."

The usual suspects spent the most:

In the first half of 2010, Goldman Sachs (GS, Fortune 500) spent $2.7 million, just $100,000 shy of the total the firm spent on lobbying in all of 2009. The firm's reports to the federal government said it lobbied Treasury, White House and the Commodity Futures Trading Commission, as well as Congress.

Other banks also flexed their muscle on Capitol Hill this year. Citigroup Inc. (C, Fortune 500) spent $3 million and Bank of America Corp. (BAC, Fortune 500) spent $2.1 million on lobbying during the first half of this year, the Center for Responsive Politics reports.

Banking and financial lobbying groups are among the heavy hitters so far in 2010. The American Bankers Association (ABA) has spent $4.5 million and the Financial Services Roundtable has spent $4.2 million on lobbying so far this year, while the Securities Industry & Financial Market Association (SIFMA) has spent $2.8 million.

They tried their hardest, but, in the end, the power of people defeated Wall Street's millions.

Goldman Sachs pledged not to spend money on political ads.

Facing pressure from critics of Wall Street to limit its role in elections, Goldman Sachs has pledged not to spend any of its vast corporate reserves on political advertising.

The move was an unexpected sign of restraint after a major Supreme Court ruling this year that gave corporations the power to devote unlimited amounts to electing or defeating candidates for federal office.

The investment bank quietly revised its statement on political activities on its Web site last week, adding a sentence addressing the powers that were granted under the Supreme Court decision in January, known as Citizens United v. Federal Election Commission. “Goldman Sachs also does not spend corporate funds directly on electioneering communications,” the firm said in its statement. Those communications are generally interpreted to mean advertisements on radio and television broadcasts in the run-up to an election.

It's up to us to hold them accountable if they break their promise.

All across America, voices are speaking up in favor of Elizabeth Warren, a consumer champion, to head up the Consumer Financial Protection Bureau. The Oklahoman profiles Warren:

Warren, an Oklahoma native who is a leading candidate to head the Consumer Financial Protection Bureau that she helped create, has been the target of invective from financial insiders who fear her ideas.

Anton Schutz, president of Mendon Capital Advisers, last week said in a Reuters story: "I get disgusted every time I hear her speak." Warren, 61, is baffled by the invective.

"I have never run into anything like what has happened the past few weeks," she said. "I found myself thinking: So what is it I say? I'd really like the content."

Her goal, she said, is what it has been throughout the 20 years that she's been researching financial data, particularly as they relate to American consumers, whom she believes have been victimized by predatory practices.

"I want to make it so regular families can read a credit card agreement in four or five minutes and fully understand what the terms are. No tricks. No traps. No things that you don't figure out what's happening until after it bites you and they charge you the $39 and raise your interest rate to 29 percent," she said.

Financial insiders point to Warren's lack of industry experience as evidence that she doesn't grasp the complexities of their business or the impact regulatory changes would have.

"I do understand," she said. "It's that we disagree. There are some things that I don't think are all right, and people who are making money off of it think it's just fine."

She gets it. And, that's why hey're scared. They're scared because she'll hold them accountable. Newsweek's Jonathan Alter says it makes political sense:

Republican senators vote along party lines against Obama on almost every issue this side of Afghanistan. Having opposed the consumer bureau, the leadership will do everything it can to weaken it, including opposing Warren. But this particular obstructionism carries a price. The GOP would look horrible going into the fall campaign trashing the one official who has stood up for 200 million credit-card holders against predatory lenders. A few Republican senators (including Snowe, Collins, and Grassley) know this and seem willing to break ranks and oppose a filibuster...

Warren’s fierce independence is exactly what makes the control freaks in the White House uncomfortable. Their doubts about her can be traced to the same economic boys’ club that sniped at FDIC chief Sheila Bair and more recently blocked Laura Tyson, the top economist in the Clinton administration, from being the new head of the Office of Management and Budget. Geithner and Larry Summers aren’t condescending to Warren (anymore), but they prefer other candidates. Their friend Rahm Emanuel is privately worried about her confirmability. Man up, Rahm. If a big fight over Warren comes (and I doubt it will), the battle won’t be a distraction from the Democrats’ fall campaign but the best thing that ever happened to it.

And, Professor Carl Tobias makes the academic argument in the New York Times:

Your editorial accurately states that she has the intelligence, expertise, independence, tenacity, diligence and character as well as the familiarity with how Washington works to head the new Bureau of Financial Consumer Protection.

She has also done the unglamorous, but critical, work of collecting, analyzing and synthesizing empirical data on consumers and credit that would inform her leadership of the fledgling agency and enable it to avoid the pitfalls that plagued the Consumer Product Safety Commission.

Wall Street is against her because she will stand up for us.