Financial Reform-The Devil's In The Details
By Julianne Malveaux
Late last week, the United States Senate passed a financial reform bill by a vote of 59-39. Two Democrats crossed party lines, as did four Republicans to come up with the result. Now, the House, which has already passed financial reform legislation, and the Senate, will have to reconcile their versions of the bill. Now is the time for consumer advocates and others to counter the aggressive lobbying that will be done by banks and the auto industry to minimize the effects of legislation. This may also be an opportunity for the Congressional Black Caucus to raise its voice on the side of the many consumers who have been damaged by this financial crisis. While legislation is not meant to look backwards, but instead forward to prevent future crises, the CBC are among those who advocate for the least and the left out. Their perspective on financial regulation is badly needed.
The House would create a consumer protection agency that is freestanding; the Senate would house the agency inside the Federal Reserve Bank. In some ways having the Fed run consumer protection is like having the fox patrol the chicken coop. Isn't this the same Fed that was part and parcel of the 2008 financial meltdown, the same Fed (then led by Alan Greenspan) that turned a blind eye to predatory and sub-prime lending and the market distortions that emerged from the packaging of substandard loan paper? The Federal Reserve theoretically already deals with regulation around credit cards and mortgages and to date they've not done a good job. What will change when they now have a consumer protection agency? Hearings, anyone?