Rep. Hensarling: Banks ‘Ought To Trump’ Consumers
Rep. Hensarling: Banks ‘Ought To Trump’ Consumers
Today, during markup of legislation before the House Financial Services Committee that would create a Consumer Financial Protection Agency (CFPA), Republicans proposed an amendment that would give all of the other federal bank regulators — including the Federal Reserve or the Comptroller of the Currency — the ability to veto CFPA rules that threatened the “safety and soundness” of financial institutions.
Rep. Jeb Hensarling (R-TX) explained that he supported the amendment because the health of a financial institution “ought to trump” concerns regarding consumers, all of the time:
The safety and soundness of the system, taxpayer protection, ought to trump the ability to ban financial products. And let’s face it, I understand the chairman said that this new CFPA would not have the ability to set goals, but if you control the product mix, if you can ban products, if you can modify their terms, of what some have estimated could be as much as 10 to 15 percent of our economy, then yes, I conclude you can adversely impact the safety and soundness of these institutions.
Watch it:
So if it can’t outright prevent the CFPA from being created, the GOP would like to ensure that it’s a toothless agency that can’t stand up to the bank regulators. (Hensarling presents this as “taxpayer protection,” ostensibly suggesting that, if the banks can make money however they see fit, they’ll never need another taxpayer funded bailout.) But the CFPA will only work if it is on equal footing with the bank regulators, with adequate abilities to write and enforce regulations.
This is because many of the products that led to the economic crisis were premised on obfuscation and taking advantage of consumers — credit cards with retroactive rate hikes, mortgages with payments that exploded after a set number of years, or overdraft fees to which consumers are automatically subjected. As Adam Levitan pointed out at Credit Slips, “the market drives the introduction of bad consumer credit products.” “Some of this obfuscation is through fine-print. Some is through product design, as complexity and exploitation of consumers’ cognitive biases can mask pricing,” he wrote.
And these actions are often very profitable, which is why the bank regulators didn’t want to stop the banks from using them. Overdraft fees, for instance, could rake in $38.5 billion for the banks this year. Those billions render the banks incredibly safe and sound, but they come at the expense of consumers. And under the Republican proposal — which will come up for a vote tomorrow — the same exact practices would be allowed to continue, and regulators at the CFPA could do nothing but scream from the sidelines.
10 Responses to “Rep. Hensarling: Banks ‘Ought To Trump’ Consumers”
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Does anyone need more proof that corporations—particularly Wall Street: 1. owns the government; 2. need to be stripped of their “personhood” afforded them by a corrupt Supreme Court decision in 1886 that extending First Amendment rights to corporations under the 14th Amendment?
It seems to me that the way Obama strategized the unfolding dynamics, he enabled corporations to do much of the writing of the inadequate “climate” legislation” and the health care “reform” legislation—NOT—which are (sort of) making their way through Congress. Consequently, both legislative efforts are inadequate for much of anything beyond re-stacking the deck for more (short-term) profit for these myopic, history-ignorant, science-clueless, greed-centric, heart (and big head)-less non-human “citizens.”
I wonder how many (human) lives they “regret” must be given so the country can be used for them to “live”—like the systemic cancer their “living” effects?
October 20th, 2009 at 11:40 pmBring back bank holding company requirements, i.e pre-Gramm/Leach/Bliley.
Goldman’s financial holding company is garbage. Our federal government protects shadow bankers when they should implode.
Obama mixes shadow bankers with America’s banking system, with huge subsidies for The Carlyle Group et al in BankUnited.
Carlyle lost another affiliate to bankruptcy today, Stallion Oilfield Services. Think what they can do for a real bank, other than turn it into a PEU financing arm.
http://peureport.blogspot.com/2009/10/carlyles-latest-implosion-stallion.html
October 21st, 2009 at 12:09 amBanks trump me daily. I get virtually zero interest on my money.
October 21st, 2009 at 12:10 amIf I had to choose between my country or my family, I would choose my family every time.
If I had to choose between my bank or my family, I would choose my family every time.
Ban adjustible interest rates, *NOW*!
October 21st, 2009 at 12:32 amThe CFPA would have authority to determine which products consumers can choose from. In short, the bill would create a regulatory overlay of the entire business community, extending far beyond traditional financial services. We need to take control of consumer choice. How does CFPA affect you? http://www.friendsoftheuschamber.com/issues/index.cfm?ID=469
October 21st, 2009 at 12:09 pmI find it very convenient how he won’t accept e-mail input from folks outside his district. Especially when he’s talking nonsense that effects all of us.
October 21st, 2009 at 4:42 pmAs a non American watching from over the Canadian border, it is beyond my comprehension why the American population is not beside itself with rage over the pain Wall Street has visited upon your great nation.
You had a revolution over a tea tax yet now you stand back and let your government funnel hundreds of billions of dollars to irresponsible financial service institutions.
Counter parties to the AIG credit default swap debacle get 100 cents on the dollar out of your pockets while the ranks of the unemployed swell, manufacturing labor contracts are renegotiated, homes continue to foreclose and pensions shrink or disappear.
It is as if you have some perverse form of socialism where profits are private but pain is public.
You are sacrificing your 200 year old experiment in democracy to a wealthy oligarchy that makes no real contribution to the economy. At least back in days of Rockefeller, DuPont, Ford, Carnegie and Stanford, the wealthy and powerful actually produced something of value.
Wall Street’s lobby is clearly back at work on capital hill making sure nothing really changes and their legal right to ravage the nation for their personal gain remains unabated.
Wake up please! For your own sake and for all of us.
October 21st, 2009 at 5:34 pmThe Party of NO’s strategy for ALL new regulation/legislation (environmental, consumer protection, health care….), when elimination fails: water it down until it’s useless, and add ineffective measures to make it as costly as possible.
October 21st, 2009 at 8:14 pmTom PA Says:
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I find it very convenient how he won’t accept e-mail input from folks outside his district. Especially when he’s talking nonsense that effects all of us.
October 21st, 2009 at 9:30 pm——————————————————–
Tom I have found a way around that system.I simply look at their local offices on their website’s contact information.I copy the zip code of the distict they represent.Then I put my full name and address but use their local zip code on the form .I explain in my e-mail that I actually live in Ct but wanted to express my opinion because they are on committees generating laws that have some results in my life as well.
Rep Jeb is a knuckle head, author of bankrupt republican ideas. We will be in this economic depression for thirty years if we give people like Rep Jeb the time of day. Texas – you need better representation vote independent all dems and republicans are crooks!!
October 27th, 2009 at 12:44 pm