A simple case for the CFPA:

So long as Congress keeps allowing institutions to shop around for the regulator that regulates least -- rather than applying across-the-board rules for each product type regardless of who issues it -- there will be no agency that provides real accountability over the consumer practices of the big banks. The agencies that do have consumer protection authority will continue to chip away at rules in order to attract institutions to regulate and preserve the fees that come with them.

That is why a strong Consumer Financial Protection Agency is crucial. We need an agency that sees consumers, not banks, as its constituents. It also needs enough power to prevent financial institutions from leaving its jurisdiction in search of fairer regulatory pastures.

And, guess who is trying to water down real consumer protections and carry water for the banks?

The amendments proposed by Senate Republicans would fail to accomplish these goals. The details have varied from bill to bill, but the ideas remain the same.

The GOP wants to put the agency under the thumb of existing regulators who have already shown how seriously they take consumer protection. And the Republicans want to dilute the agency’s mission to protect consumers with an obligation not to interfere with bank “safety and soundness,” a phrase that has been manipulated by Wall Street and its allies to exclude meaningful reform.

Fortunately, the Senate has rejected these proposals so far. But the GOP and Wall Street lobbyists will keep trying. Senate Democrats must ensure that good sense prevails.

If the Republicans successfully dilute the power of the consumer financial protection body in this way, we will end up with more of what we have always had: regulators who lack either the appetite or the authority for reining in the risky lending practices that got us into the current financial crisis.

The Republicans are standing with Wall Street and the banksters. Is that where you stand?

If you haven't already seen it... even Heidi Montag supports the CFPA!

It's happening. The teeth are being slowly pulled out of the Consumer Financial Protection Agency. The LA Times explains:

The move this week to downgrade a proposed Consumer Financial Protection Agency to lure bipartisan support instead appears to be undermining the Obama administration's effort to overhaul the nation's regulation of the entire industry.

The overhaul, aimed at preventing a repeat of the economic meltdown that helped send the nation and world markets into a deep recession, now might be moving closer to the junk heap of congressional bills than to a significant new law.

Creating a powerful and independent consumer agency, which is strongly opposed by the financial industry and Republicans, has been the major roadblock in drafting a bill that could pass in the Senate. Desperate to surmount that hurdle as this year's legislative clock winds down, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) floated the idea this week of putting the new agency in the Federal Reserve.

Although the move would gain some Republican support, it has led to howls of protests from many Democrats and consumer advocates that threaten to derail any compromise. And for good reason.

America is suffering from the worst financial crisis since the Great Depression. We let the banksters call the shots and they did - to the tune of record profits for them and a lack of jobs and opportunity for us. Now, they're trying to strip the teeth out of an organization that will protect us from their excesses. The LA Times continues:

Rep. Brad Sherman (D-Sherman Oaks), another supporter, said Wednesday that many House Democrats were unlikely to agree to give the Fed more consumer authority.

"It's somewhere between bad and terrible," Sherman said of the proposal. "For a number of my colleagues . . . that might just kill it."

Dodd's proposal might not even get through his own committee, potentially adding further delay in a mid-term election year in which major legislation is unlikely to get through Congress if not finished by the summer.

Sen. Jack Reed (D-R.I.) said he and some colleagues on the Banking Committee would try to amend the legislation to add a stand-alone consumer agency outside the Fed or any other banking regulatory body.

"There's quite a bit of disappointment with the Fed," Reed said Wednesday. "I think the best approach is an independent entity."

The banksters and their obstructionist friends are at it again. It's time for us to pressure our Senators to look out for Main Street, not Wall Street.

On Thursday, dozens of financial reform advocacy groups sent a letter to Senator Chris Dodd (D-CT), the Chairman of the Senate Banking Committee, thanking him for championing the Consumer Financial Protection Agency (CFPA) and urged the Senator not to bow to Wall Street's pressure and water down reform. The letter reads:

The undersigned consumer, civil rights, labor and community organizations would like to thank you for your strong efforts to enact an independent Consumer Financial Protection Agency. Existing bank regulators utterly failed to protect consumers from abusive lending practices in the marketplace because they were not independent of the lenders they regulated and because they subordinated consumer protection concerns to a dangerously shortsighted focus on the near-term profitability of these institutions. We strongly support the CFPA because it will transform this failed regulatory approach by creating an independent agency focused on protecting consumers from deceptive, unfair or discriminatory financial practices. Correspondingly, we will oppose any CFPA proposal that undermines the ability of the agency to make and implement independent decisions about the needs of consumers, such as placing the agency within a new prudential regulator. In fact, putting the CFPA under the OCC or a new, more consolidated national bank regulator would be worse for consumers than the existing regulatory system.

It is dismaying that some are proposing to give the same prudential regulators whose failures harmed millions of American families and brought our economy to the brink of collapse even more power to make decisions about consumer protection. The OCC, for example, not only failed to stop widespread mortgage and credit card lending abuses by banks it regulated, it actually opposed consumer protection measures to curb these abuses. In August of 2008, Comptroller of the Currency John Dugan wrote the Federal Reserve Board to propose significantly weakening core elements of a proposed rule to address unfair and deceptive credit card lending practices. Dugan said that the first reason he wanted to eviscerate these provisions was because they "raise safety and soundness concerns." Even the Federal Reserve Board rejected the OCC’s anti-consumer views and finalized a rule that Congress then improved when it passed the Credit CARD Act.

It would be equally impossible to assure the necessary degree of independence for a CFPA if its rules were effectively subject to veto by a political appointee such as the Secretary of the Treasury, at the behest of a banking regulator. The models for “independent” agencies within the Treasury – the OCC and the OTS – have statutory guarantees of autonomy from the Secretary in rule-making and enforcement, in addition to other attributes necessary for independence, such as independent funding.

We can think of no other circumstance in which an agency charged with protecting the American public can have its actions vetoed because of a challenge by another agency focused on the priorities or profitability of a regulated industry. Though the auto industry is important to the American economy, we do not let the Commerce Department attempt to override NHTSA's auto safety rules or vehicle emissions standards. We would not give another agency the legal authority to get a FAA airline safety rule or EPA clean water regulation vetoed because of the impact on industry. We do not let the Small Business Administration trigger a legal process to OSHA's worker safety rules because they might eat into business profitability.

Given the very poor consumer protection track record and lack of independence from the institutions it regulates, neither the OCC nor its successor should have the ability to oversee or, in effect, veto decisions by a CFPA. It should also be prevented from trying to use phony claims regarding "safety and soundness" to slow or stop consumer protection measures.

The evidence is clear that strong consumer protection measures will also protect the long-term stability of financial institutions, even if these measures impinge on short-term profitability. For example, if the OCC and other banking agencies had paid more attention to the impact of abusive subprime mortgage loans on consumers, it would have better protected the solidity of the institutions it regulated as well. It is no longer appropriate to allow prudential regulators to narrowly (and improperly) focus on the short term profitability of the institutions they regulate by rejecting measures that are in the best interest of consumers.

Our organizations strongly urge you to reject all proposals to allow prudential regulators to oversee or veto legitimate consumer protection decisions by an independent regulatory agency. Once again, we commend you for your strong support of the CFPA and look forward to working with you to achieve this crucial goal.

The letter was signed by a number of advocacy organizations calling for responsible reform including Americans for Financial Reform, AFL-CIO, California Reinvestment Coalition, Center for Responsible Lending, Ctw Investment Group, Consumer Action, Consumer Federation of America, Consumer Union, Consumer Watchdog, Demos, Empire Justice, International Brotherhood of Teamsters, National Association of Consumer Advocates, National Community Reinvestment Coalition, National Consumer League, National Consumer Law Center (on behalf of its low income clients), National Fair Housing Alliance, National People's Action, New Jersey Citizen Action, Public Citizen, Sargent Shriver Center on Poverty Law, SEIU, The Leadership Conference on Civil and Human Rights, U.S. PIRG and the Western States Center.

Time Magazine's Michael Grunwald makes the case for the Consumer Financial Protection Agency (CFPA) and dismantles three major myths in a must read piece.

When you buy a dishwasher, you know it probably won't explode. When you buy aspirin, you can figure out the side effects without an advanced degree. When you buy zucchini, you can feel confident it won't be toxic. And when you buy movie tickets, you can presume the terms of your purchase won't change after you leave the window.

But when it comes to financial products like mortgages and credit cards, you can't be sure of any of those things. That's the basic case for a Consumer Financial Protection Agency (CFPA), the centerpiece of President Obama's push to reform financial regulation. (See the financial crisis after one year.)

The argument is that finance has become a Wild West of outrageous hidden fees, ridiculous fine print, deceptive come-ons and secret side deals designed to sucker us into predatory rip-offs we can't afford or escape. And the CFPA is supposed to be the new sheriff in town. It would be an independent agency empowered to write and enforce rules for financial products, so that banks would no longer enjoy lax consumer regulation — and nonbanks peddling loans from hell would no longer escape just about all regulation. It would be like a financial version of the Consumer Products Safety Commission (CPSC), the Food and Drug Administration (FDA) or even the Environmental Protection Agency (EPA).

Financial reform is complex, and it's hard for nonexperts to follow which proposals for a derivatives clearinghouse or systemic risk council have teeth and which are sops to the industry. One political attraction of the CFPA is its simplicity: you're for it or against it. After sketchy subprime mortgages helped crater financial markets, even laissez-faire ideologues like Alan Greenspan called for stronger regulations to curb abuses and stabilize the system. And given the well-documented outrages pervading the industry these days — exorbitant overdraft fees, late fees, nuisance fees and balloon payments buried in opaque legalese, slimy yield spread premiums that banks give brokers who push high-risk mortgages — it's awkward to argue against it.

Grunwald goes on to dismantle three key Wall Street assertions First, he tackles the ridiculous claim that the CFPA weakens consumer protection.

Nobody is defending the recent performance of the Federal Reserve, the Office of the Comptroller of the Currency (OCC) or any of the other financial agencies with current consumer-protection duties. But that doesn't necessarily mean those duties should be transferred to a brand-new bureaucracy. As JPMorgan Chase CEO Jamie Dimon has been asking privately: If my legal department screws up, do I create a new legal department? Some bank lobbyists argue that consolidating all consumer protection in just one new agency would be like leaving just one rookie cop patrolling a highly complex beat. Critics like John Dugan, the head of the OCC, have warned that if consumer-protection duties are separated from the "safety and soundness" duties of traditional bank regulators, then both will suffer.

Of course, it's fair to wonder why bank lobbyists would be so concerned about the CFPA failing to protect their customers from exploitation. And agencies like the OCC can be expected to protect their turf. But the status quo just isn't working, and history suggests that consumer protection will never be a top priority at agencies primarily responsible for ensuring the financial health of banks. The CSPC, FDA and EPA aren't perfect, but their clear missions have made them much less susceptible to capture by industry, and much more attractive to employees who are serious about enforcement. That's the appeal of a financial agency exclusively devoted to protecting consumers.

Then, he addresses the argument that CFPA won't fix everything by pointing out that it's not an actual argument against CFPA.

Warren argues that the financial meltdown of 2008 was essentially a consumer-protection meltdown, a direct result of exploitative loans that never should have been approved. It's certainly true that the securities that sparked the crisis began imploding after subprime borrowers began struggling to repay the underlying loans. Still, the notion that a CFPA would have prevented the mess is debatable at best. It's not as if all borrowers who bit off more than they could chew were deceived; many of them just wanted more house than they could afford, and it's not clear whether an agency devoted to helping consumers would have pushed for stricter scrutiny of their credit histories, higher requirements for their down payments and other borrowing restrictions that might have helped save them from their own bad instincts. In any case, it's hard to imagine how the subprime crisis would have metastasized into a financial collapse if banks hadn't been so big, interconnected, complex and overleveraged — problems that had little to do with consumer protection.

So the argument that better consumer protection will prevent the next collapse is no slam dunk. But better consumer protection is still a good idea! And the CFPA is a clear way to send a message that the economy is supposed to work for ordinary families. We should have a CFPA — and also size restrictions, stricter leverage rules and capital requirements, better regulation of complex derivatives, an orderly mechanism to wind down failing firms without bailouts and all the other elements of financial reform.

Finally, he addresses the naysayers that say reform isn't possible in today's Washington. He tells them: make members of Congress take a stand on whether they're with Wall Street or Main Street.

The argument here is that reasonable people can disagree on the importance of a new consumer agency, but it's not a realistic goal, because Republicans have declared it a deal breaker. Even before the Massachusetts election, Democratic Senate leaders had decided not to reprise the horse-trading it took to get them 60 votes for health care reform. They want a bipartisan bill, and there's no way that will happen with the CFPA. Why not ditch it?

Because there's no guarantee that ditching it will ensure a bipartisan bill. Health care was telling: Republicans called the public option a deal breaker, but once the public option was deleted, they found new excuses for obstruction. They say financial reform is different, but it's worth noting how many Republicans supported it in the House: zero. (See why financial reform is easier than health care.)

Senator Christopher Dodd, the Democratic chairman of the Senate Banking Committee, recently broke off negotiations with Senator Richard Shelby, the ranking Republican, a politician so committed to bipartisanship that he placed a hold on all Obama Administration appointees to extract some pork for Alabama. Now Dodd is trying to negotiate with Senator Bob Corker of Tennessee, who said in a recent interview that he truly believes an agreement is possible. But in that same interview, Corker described some modest Administration proposals — like giving consumers the option of a simple "plain-vanilla" mortgage — as "way, way out in left field." He also said that when Obama proposed a small tax on large banks to recoup the costs of the bailouts, he wondered if he was living in the U.S. or Venezuela. And he's considered the most compromise-friendly Republican.

Realistically, the only way Republicans are going to support a financial-reform bill is if they conclude that they're going to pay a serious political price for obstruction. And they're only going to pay that price if they're perceived as anticonsumer; the finer technical points of derivatives regulations or proprietary trading are not going to move the masses. A new bureaucracy might not scream populism either, but it's probably the best way to portray a vote on reform as a choice between the banks and the people.

The right wing is trying to hoodwink America into believing that financial regulatory reform is something that it's not. Don't let them get away with it. Circulate this article to expose the lies.