Gloomy thoughts for a sunny day

by: Jay Stevens

Wed Mar 10, 2010 at 13:48:02 PM MST

Senator Bob Corker, the Tennessee Republican who is playing a crucial role in bipartisan negotiations over financial regulation, pressed to remove a provision from draft legislation that would have empowered federal authorities to crack down on payday lenders, people involved in the talks said. The industry is politically influential in his home state and a significant contributor to his campaigns, records show.

I've been following politics for a long time, and this is the first time that I can remember where Democrats held a solid and unbreakable majority in both federal legislatures and held the White House. And I have to say, it's been d*mn demoralizing. Evidence A: banking regulation.

You'd think, after watching the financial sector torpedo the American economy, good, efficient, and workable banking regulation would be a priority. And there was hope, in Chris Dodd's consumer protection agency, which would have consolidated financial regulation into one body, and which would have refocused regulation on consumer protection, something has been missing in the crazed, corporate-fueled deregulation blitz of past decades.

You'd think corporate behavior in the financial sector after the bailout - the insolent, massive payouts to its executives, the orchestrated maneuvering to place blame for the crash on blacks and the poor, the exorbitant fees and interest rates imposed on its customers - that regulation would sail through Congress. But Dodd's agency has been effectively torpedoed, regulation watered down.

And now this. Corker's reflexive protection of the most rapacious lending industries in existence. Legal loan sharking targeting those with the least financial savvy and least ability to recover from parasitic interest rates.

And in diluting or warping good legislation beyond recognition,  Corker is not alone. After all it was Max Baucus himself who was the first to grab a House jobs bill as it came into the Senate, steered it into his Tax and Finance Committee, and made it contingent on "reforming" the estate tax (and preserving the odious Patriot Act). That's right - a bill to help the unemployed find work must also help the children of the mega-wealthy keep their condos in Vail.

In short, it's been demoralizing seeing this Democratic supra-majority squandered in the back rooms, gutted by "compromises" that riddle bills with so many loopholes that they end up looking like the legislative version of swiss cheese.

Yes, I know, legislation is the result of years of work. Yes, I know I should be patient. Yes, sure, some banking regulation is better than no regulation (...or is it?). But I don't see any relief, any glimmer of values from Democratic legislators.

Or am I missing something?

Tester: support Chris Dodd's financial regulation legislation

by: Jay Stevens

Fri Nov 20, 2009 at 14:36:41 PM MST

Dodd said outdated rules leave regulators unable to keep pace with the industry.

"Our financial regulatory system, created piece by piece over decades with little thought given to how it would function as a whole, is simply unable to prevent staggering greed and unthinkable recklessness from threatening our economic security," said Dodd....

Dodd's legislation would create a single bank agency aimed at preventing regulator "shopping" by firms seeking lenient oversight. He also proposed setting up a systemic-risk agency and a Consumer Financial Protection Agency to police firms for credit-card and mortgage lending abuses.

The bill would also remove the bank oversight powers of the Fed and FDIC and create a Consumer Financial Protection Agency, whose function would be to monitor and regulate financial institutions and the products they offer, including credit cards, mortgages, and other traded investments:

Under the proposed legislation, the agency would have the power to monitor the financial marketplace, including loans and credit cards, with consumers' interests top of mind. Existing agencies that have that power today have other industry monitoring responsibilities as well.

The agency would focus on making sure financial product disclosures are easy to understand so consumers know what they are getting themselves into as well as on financial literacy education and research. It also would have the power to write rules and enforce them on issues such as arbitration for credit card disputes.

The bill has hit a familiar snag: "centrist" Democrats, and nay-saying Republicans.

One of the Democrats on Dodd's Banking Committee is Jon Tester. In recent statements, Jon's reaffirmed his commitment to ensuring that "members of the insurance industry" have their "feet to the fire," and that national financial institutions are "held accountable" while local banks aren't subject to excessive regulation. One way he can be true to his rhetoric is to support Dodd's banking bill when it comes up to vote....

Dodd & Homeownership

by: Matt Browner Hamlin

Fri Nov 16, 2007 at 17:29:16 PM MST

First, Senator Dodd has been painted  as siding with Bush on issues relating to homeownership. That's just not true. The FHA Modernization Act passed out of the Banking Committee 20-1, with all Democrats supporting it  - a good indication that that Dodd is not supporting the President but rather leading on an issue important to every segment of society and critical to ensure that people are able to find affordable housing and achieve the dream of homeownership.

The Center for American Progress, hardly a pro-Bush bastion, praises the legislation.

  The Federal Housing Administration Modernization Act of 2007 would give the FHA more flexibility to insure mortgages for higher-risk borrowers and step up its role in solving the mortgage meltdown. And a valuable amendment added by Sen. Jack Reed (D-RI) will provide struggling borrowers with financial counseling to help them refinance if it's included in the final draft of the bill.

But most importantly I want you all to know what Chris Dodd will do as President. He's for expanding homeownership for all Americans and has a plan to make it easier for people to get down payment assistance without endangering them financially.

  "As President, he [Dodd] will also expand down payment assistance through creation of a Shared Equity Trust in which homeowners receive grants to reduce the cost of purchasing a home in exchange for agreeing to share home price appreciation with the Trust upon future sale."

Again, thank you Jay for inviting me to respond. If anyone at Left in the West has a question, please feel free to contact me at mbrowner-hamlinATchrisdoddDOTcom.

How Edwards Can Win Over Small Business Owners

by: Interrobanger

Wed Sep 19, 2007 at 09:53:59 AM MST

John Edwards is pretty good when it comes to the credit card industry. To be sure, he has made an issue out of it, while I can't find much anything about the issue on either Hillary Clinton's or Barack Obama's websites. I'll give credit where it's due: He's willing to take on issues that matter to real Americans.

But then the flip-side of that is that I'm addressing this diary to him, and not to the others. They should listen too. But I think Edwards is the only one who might, and maybe is the one who can make the best political use as well.

More below the jump.

The lowdown on the anti-small business, anti-consumer interchange fee

by: shunter

Thu Mar 01, 2007 at 08:40:23 AM MST

Expanding the field of progressive ideas is never easy. We are a mixed bunch with many causes and sometimes it can be tough to figure out which ones are worth going for. Here is one suggestion.

I am working with a group called the Merchants Payments Coalition, a collection of retailers from restaurants, convenience stores, grocery stores. They don't have a lot in common -- their markets are diverse and sometimes competitive, but one thing they agree on happens to be something U.S. PIRG and other progressive groups have been talking about.

The issue is Interchange Fees, a very complex (this is on purpose) fee imposed by the banks that issue credit cards for MasterCard and Visa. The fee is charged directly to merchants -- so their interest should come as no surprise -- but it is important to remember that ultimately this fee gets passed along to consumers in the form of higher prices on all products.

So what's the big deal about that? Fees are a part of life, just part of doing business, right? Not in a market that is essentially a duopoly.  Visa and MasterCard together control 80% of the U.S. credit card market, and the banks that issue their cards are usually the same banks (JP Morgan Chase) so they wield monopolistic control of the market.

There is also no way to avoid this fee. You can pretty much avoid any credit card fee if you don't use credit cards -- but not this one. One of their tricks is that any merchant who accepts credit cards cannot offer consumers a cash discount.  Studies show that only 14% of the money collected from interchange fees is needed to cover the cost of processing credit card transactions.  This means that a whopping 86% of the fee is extra profit for the card companies, or even worse, helps fund reward programs for high-income credit card owners.

Every time a low-income consumer purchases something with cash at a store that accepts credit cards, they are subsidizing plush reward programs for wealthy credit card users.  It is essentially a reverse Robin Hood wealth transfer, from the poorest members of society to the wealthiest, and it is being encouraged by the card companies, who continue to offer even greater reward programs.  A low-income consumer with a poor credit history is not allowed to enjoy the benefits of these reward programs, yet their hard-earned money helps fund them.

Now that we have a Democratic Congress, the use of committees is very important, and one we should put our stamp on is the Banking Committee.  Chris Dodd has already started hearings on hidden credit card fees and predatory lending. Warren Reports at TPM Café followed that on the week it happened, and there is another diary on this subject at My Left Nutmeg.

What we need are more hearings to put further pressure on the credit card industry. Dodd is off to a good start, but we need more action. A major problem is that the interchange fee schedules and agreements are kept secret by Visa and MasterCard.  First and foremost this is a matter of transparency -- and the lack of it is hurting people's pocketbooks.  It doesn't cost you much with each purchase you make, but it adds up fast.  In fact, it's the single biggest fee the card issuing banks collect, costing consumers $30 Billion dollars last year alone.

I encourage members of this community to help us put pressure on the credit card companies in order to convince them to provide more transparency and lower these inflationary fees.

Note of disclosure: I am writing this with input from others who are working with me to help raise awareness of this issue, so you may find a similar version of this diary on other progressive blogs. This is an important issue, so we will be around to follow up.

Western Dem Guru is a Strategist for Sen. Chris Dodd

by: Matt Singer

Wed Dec 13, 2006 at 09:46:01 AM MST

It now takes a stranger turn -- the president of the project is Doug Sosnik. It turns out he is a key advisor to Chris Dodd's nascent Presidential run. Now, you can like Dodd or dislike Dodd, but I don't think the CT Senator really screams Western or even "Appeal to Westerners."

And what I can't figure out about this whole thing is that the New West Project seems like a basically good idea -- although they probably could have funneled the efforts into the already existing Democrats for the West -- but 90% of politics is execution. And so far, the structure of this thing has me, honestly, a bit confused.