On September 30, the U. S. House Committee on Financial Services held a hearing on the proposed Consumer Financial Protection Agency, the Obama Administration's plan to repair the failed, jerry-rigged financial regulatory system by creating a robust consumer watchdog agency to oversee the industry in hopes of preventing future economic collapse. The hearing is one of several held in preparation for the committee's consideration of draft legislation incorporating this plan next week.
Idaho Blue Dog Congressman Walt Minnick sits on the committee and made headlines last month for publicly opposing the CFPA, floating instead his own proposal for a weaker council composed of existing financial regulators and lacking the enforcement teeth of the proposed agency, but during the hearing was strangely quiet.
As Greg Kaufmann at The Nation describes it, under the new agency:
No longer would financial institutions be able to choose their federal regulator--if they have one at all--shopping for the one that is most accommodating to their interests.
No longer would the regulators depend on the very firms they are supposedly monitoring as a major source of funding.
And no longer would consumer protection be an afterthought--understaffed, under-funded, and absolutely underwhelming.
The financial services industry and trade associations, led by the U. S. Chamber of Commerce and the American Banking Association, are strenuously opposing the CFPA, backing up their opposition by flooding Capitol Hill with money and lobbyists. The Chamber announced a well-funded campaign to combat increased regulation in June. In August, Public Citizen reported that between election day and the end of June, trade association and industry PACs and lobbyists representing top TARP fund recipients contributed $6 million to and hosted 70 congressional campaign fundraisers, including for Minnick and Idaho Senator Mike Crapo who sits on the Senate's banking and finance committees.
Although not among those benefiting from their 35 scheduled campaign fundraisers, the U. S. Chamber of Commerce has become quite fond of Minnick. September 24, in a keynote speech to the group about the CFPA, it was evident that he is focused on the impact the new agency would have on the financial industry, stating that he hopes to work within the Financial Services Committee "to get a bill that is as accommodating and sensible from the standpoint of the financial community as we can."
It was also apparent that he is not as focused on the consumer protection aspect of the CFPA, continually referring to the proposed agency as the "consumer financial product agency." A name is just a name and one could argue that this slip doesn't mean much in the grand scheme of things but it is notable that he did so throughout the entire thirty minutes he spent with the group, even as the host and questioners referred to it correctly. It also gives some insight as to his thinking—it's not on protection.
After making his opposition public and becoming the point man for industry efforts to eliminate the CFPA, oddly, in last week's hearing on the proposed agency, Minnick gave no statement, asked no questions of either witness panel and appeared to leave the three and a half hour hearing within the first thirty minutes (check the video here).
To be fair, not every member of a committee is expected to attend every minute of a hearing; even the committee chairmen frequently leave during testimony. Also Minnick's resolution calling for the release of Chinese dissident Liu Xiaobo was scheduled for full House consideration the same day, although according to the Clerk of the House, debate on that began at 1:35 and it was adopted by 1:51, while the CFPA committee hearing was scheduled to begin at 10:00. Apparently Congressman Minnick already knew everything he needed to know about the CFPA or had more important things to do.
Had Minnick stayed long enough he would have heard this testimony from witnesses, reported again by Kaufmann in The Nation:
Janis Bowdler, a deputy director at the National Council of La Raza, said, "Deficient oversight failed Latinos, other communities of color, and those of modest means...Despite clear evidence that minority borrowers were paying more for credit and being steered into subprime credit when they qualified for prime, the trends went unnoticed by federal regulators...[We need] a new agency dedicated to consumer protection, product innovation, and equal access to financial markets."
The CFPA "would support if not require regulators to become more protective of consumers," said Hilary Shelton, director of the National Association for the Advancement of Colored People. "And it would make civil rights protections more of a key element in the regulation and oversight of financial services...We need [an] agency whose primary function is to provide some protection to consumers."
Michael Calhoun, president and chief operating officer at the Center for Responsible Lending, asked simply, "Who does the Congress want to trust with carrying out this authority? For me, a telling statistic... if you look from 2002 to 2008, the [Office of the Comptroller] did not make a single--a single--referral to the Department of Justice for equal credit violations. Now do you want to trust the authority back to them? Or do you want to try a different approach?"
"Even those financial institutions that were regulated had regulators who were looking at them from the perspective of what was good for the institutions, not what was good for the consumers," [Anna Burger, secretary-treasurer of the Service Employees International Union,] agreed. "It would be good to have an agency that actually looks at the interests of the consumer first, as opposed to last."
Evidently Walt Minnick doesn't see it that way. He sees the interests of the financial industry first and is working to accommodate those interests. The same corporate interests that are largely responsible for bringing the U.S. economy to its knees, pocketing billions in bailout funds and driving thousands of Idahoans below poverty. Yes, that financial industry. Is this really what Walt means when he says he's doing what's right for Idaho?