debate - Page 2 - Represent Consumers

While a key Democrat has been wobbling in his support for an agency to protect financial consumers, President Obama and members of his administration have recently come out strongly in support.

But will they fight for it in the face of relentless opposition from bank lobbyists, Republicans and Blue Dog Democrats?

The Obama administration’s abandonment of the public option in the health care debate provides a grim omen for the financial reform battle.

Some have compared the public option to the Consumer Financial Protection Agency. Both enjoyed broad public support but have been fiercely opposed by the businesses they would challenge: insurance companies fought hard against the public option while financial institutions fiercely oppose the consumer protection agency.

Aside from industry opposition, the public option and the CFPA shared the potential to provide a shield for consumers against abuses.

At various times, the president also supported the public option. Today his spokesman said the public option just didn’t have the votes. But that assessment was something of a self-fulfilling prophecy. There’s little evidence that President Obama put much pressure on legislators in support of the public option, and his ambiguity in public didn’t help it, either.

After initially supporting the public option, the president signaled it was not a crucial aspect of health-care reform.

But the public option offered the only potential check on the insurance companies, which are about to get a glut of new customers forced to buy policies from them. Democrats are suggesting a tepid combination of subsidies and insurance cooperatives that won’t provide meaningful accountability for the insurance companies.

Now Republicans are digging in their heels in opposition to the CFPA, with the usual rhetoric about wasteful government bureaucracy. It’s nothing but a thinly disguised fundraising pitch to woo the financial industry back from Democrats. Chris Dodd, soon to be retired head of the Senate Banking Committee, has suggested the consumer protection function might co-exist within some other agency. That’s a very bad idea. Just look at how much consumer protection the Federal Reserve, Treasury Department and other agencies accomplished in the housing bubble and its aftermath.

If that’s not enough to convince you, look at the recent shenanigans by banks and credit card companies piling on new fees.

The New York Times reported this morning how banks are getting ever more aggressive in socking their customers with higher over-draft protection fees. Credit card companies, even in the face of new regulations, are finding new ways to gouge their customers, charging fees for paying off your card on time, or even charging fees for not using a card.

There’s nothing stopping the Treasury and the Fed from using their bully pulpits to rail against these continuing abuses now. But they don’t. They ignored warnings about predatory lending during the housing bubble and have shown no stomach for protecting consumers since the economic collapse.

Dodd is supposed to unveil his latest version of financial reform this week. Let President Obama and your senators know that you won’t be fooled by financial reform in name only. Whether President Obama is capable of staying the course we don’t know. But we do know we need a strong, independent Consumer Financial Protection Agency.

In his weekly address last Saturday, President Obama said, “What’s being tested here is not just our ability to solve this one problem, but our ability to solve any problem.” Obama’s speech was about health care reform, but his point goes to the heart of the debate underway in this country – a debate that the Tea Party movement has given a sharp edge.

American’s have lost their confidence in the basic institutions of our democracy. It’s not just the President’s rating that is down in the polls, it’s Congress’s, the United States Supreme Court, even the college system.

There is more than ample justification for this stark collapse of trust. As I wrote last summer, I believe it all begins with the crash of the Money Industry after years of deregulation by federal officials who, quite simply, sold out – and then showered billions of taxpayer dollars to save the speculators while the rest of the economy, along with millions of people’s jobs and savings, went into the tank. Even now, the Wall Street execs whose greed and speculation caused the crash continue to call the shots in D.C.

After that pitiful performance by our government, who can blame people for distrusting Washington’s plan to fix the health care system?

Lately I’ve been pondering two other disasters that might have been averted had government done its job.

An appendix (PDF) to the 2004 report of the 9/11 Commission describes in agonizing detail how our government was unable to mount a defense of the nation that day despite trillions of dollars spent on defense and the military in preceding years. That morning, there were only fourteen jet fighters guarding the country. Flight controllers couldn’t connect the dots as the multiple hijackings unfolded; FAA officials failed to follow procedures to communicate with the military; scrambled fighters were too far away and sent to the wrong locations; the military never even knew how many or which commercial airplanes were involved until all four were down. A fateful order from the White House to shoot down any commercial planes that refused to land never even reached the fighter pilots who by then were flying combat cover over the East Coast.

On that horrible morning, it was only when individuals took matters into their own hands – the passengers of United 93 who fought the terrorists as their plane headed for a strike on he nation’s capitol, or an FAA manager who ignored protocols and unilaterally ordered all planes in the air to land – that more lives were spared.

Or, consider the case of Amy Bishop, the University of Alabama professor who shot six colleagues a few weeks ago. As rendered by the New York Times, her profile now, after the deed, reads like the description of “angry loner” we have grown familiar with from previous mass murders, but no one ever connected the dots of her obviously deranged life. In 1986, she killed her brother but claimed it was an accident and got off, perhaps due to political connections; in 1993, she was questioned in connection with a pipe bomb sent to one of her college professors; in 2002, she punched a women in the head at a House of Pancakes for taking the last booster seat.

What to do, then, about such profound failures by government? Do we follow the suggestion of Glenn Beck, who over the weekend blamed progressivism – the philosophy of engaged government championed by Theodore Roosevelt – for our nation’s ills?

I’m not one of those people who is offended by the eruption of angry Tea Party organizations around the country. To the contrary, the TP’rs are raising questions, pointing out problems and demanding answers from elected officials – just what an active citizenry is supposed to do.

But I disagree with their premise, which is that government is responsible for all that is wrong with our country, and that the solution therefore is a castrated federal government or no federal government at all.

That’s stupid.

We need police. We need the military. We also need a cop on the corporate beat in the executive suites of Wall Street. And we need rules and regulations to prevent health insurance companies from ripping us off or condemning us to death.

When our government institutions fail us, as they have, through incompetence and corruption, the answer is not to get rid of government, but to make it work better. How to do that? Read my next column.

Strong Financial Consumer Protection Not Optional

Bad Government