Obama Gets a Thumbs Up

[TampaYankee]

Obama Names Elizabeth Warren To New Post Setting Up Consumer Protection Agency

JIM KUHNHENN | 09/17/10 06:51 PM | AP

WASHINGTON In a poke in the eye to the financial community, President Barack Obama on Friday named Elizabeth Warren, an aggressive consumer advocate and Wall Street adversary, to oversee creation of a new agency to regulate banks, lenders and credit card companies.

Sidestepping a Senate confirmation fight for now Obama stopped short of nominating Warren to actually head the new Bureau of Consumer Financial Protection. Instead, his action will let the Harvard Law School professor and expert on bankruptcy move quickly to shape the bureau.

Senate Republicans view her as too critical of Wall Street and big banks. The business and banking community opposed Warren as director of the new bureau, contending she would make the agency too aggressive. Obama praised her highly.

"Never again will folks be confused or misled by pages of barely understandable fine print that you find in agreements for credit cards or mortgages or student loans," Obama said, standing alongside Warren and Treasury Secretary Timothy Geithner in the White House Rose Garden.

"Elizabeth understands what I strongly believe: that a strong, growing economy begins with a strong and thriving middle class," the president said. "And that means every American has to get a fair shake in their financial dealings."

Billed as a big help to abused consumers, the new bureau is charged with writing and enforcing new rules covering the largest banks to the smallest storefront payday lender. Lenders will face new restrictions on the type of mortgages they write and won't be rewarded for steering borrowers to higher-cost loans. The bureau also is to protect borrowers from hidden fees and abusive terms.

Obama named Warren a special assistant to the president, giving her an influential province from which to direct the new bureau, a central element of the sweeping financial overhaul Obama signed into law this summer. The consumer bureau was one of Obama's key demands, easy for the public to grasp in an otherwise dense rewrite of complex financial rules.

Liberal groups and many consumer advocates want Warren to be named director of the new bureau. With the advisory appointment in place, White House spokesman Robert Gibbs said she would be instrumental in selecting a full-time director but hedged when asked if she would be a candidate.

Obama has had a difficult time winning Senate approval for even non-controversial nominees, and the White House believed that anyone nominated to the director's job especially Warren would linger without Senate action for months.

An Oklahoma native who was a state high school debate champion, the 61-year-old Warren was the architect of the consumer bureau, calling three years ago for the creation of an agency that would consolidate the consumer protection powers now spread across numerous financial regulatory agencies.

"Elizabeth is the best person to stand this agency up," Obama said.

The job has the official status of a Cabinet undersecretary, but the title of special adviser to the president elevates her stature considerably and gives her direct access to the Oval Office. The designation appeared designed to quell worries among some Warren supporters that she would be subservient to Geithner.

Congressional Republicans promptly objected to the arrangement. Reps. Darrell Issa, R-Calif., and Spencer Bachus, R-Ala., in a letter to White House counsel Bob Bauer, said that by giving Warren responsibilities at the White House and Treasury, Obama was undermining congressional oversight because she could avoid testifying before House or Senate committees. "This is unprecedented," they wrote.

The law gives the Treasury Department the authority to run the consumer protection bureau while the nomination of its director is pending. For now, Warren will be responsible for assembling the bureau and shifting consumer functions from regulators to the bureau. On Friday, Geithner set July 21, 2011, as the deadline for that transfer.

That means the bureau won't be able to enforce rules restricting mortgages or credit cards until at least then.

Warren would not have an immediate effect on other bureau activities. The consumer bureau, for instance, has as long as 30 months for regulations on predatory lending to take effect.

Warren has spent the past two years running the Congressional Oversight Panel, charged with monitoring the Treasury Department's handling of the $700 billion bank rescue fund known as the Troubled Asset Relief Program. She stepped down from the panel just after Friday's announcement.

House Financial Services Committee Chairman Barney Frank, a fan of Warren's, said she told him a few months ago that she thought it was more important that she help set up the agency than be its first director. Frank, D-Mass., said he made that point to Obama adviser David Axelrod.

"That doesn't mean she doesn't want the job, only that the setup is important and that sacrificing the ability to have her there to set it up so as to preserve her ability to be the full-time director would be a bad trade," Frank said in an interview.

Frank disagreed with House Banking Committee chairman Christopher Dodd, D-Conn., who has said that even with Warren in her new role, the White House needs to move quickly to nominate a new director.

Frank said Warren now has until the end of the president's first term in January of 2013 to set up the agency. Asked whether Obama should nominate a director soon, Frank replied: "Why?...The administration has found a way to put the best possible person in charge of it. I'm satisfied with that for now."

The consumer bureau was the most contentious feature of the financial regulation bill. The financial industry and the U.S. Chamber of Commerce mounted a fierce campaign to kill it while Congress assembled the legislation.

David Hirschmann, a senior vice president at the Chamber, said Warren's arrangement prolongs the uncertainty that has some lenders skittish about extending credit.

"If you're a credit provider, you're sitting there wondering what types of products you're offering will be second-guessed later as unfair, deceptive or not approved," Hirschmann said. "If you don't know what the speed limit is on the road and you knew there were cops out there trying to catch you, that would make you reluctant to drive."

Travis Plunket, legislative director for the Consumer Federation of America, said Warren will be crucial in setting the bureau's priorities, its culture and its regulatory tone. But, he added: "I don't see it as substituting for the need to get a director nominated and confirmed."

___

Associated Press writers Julie Pace and Daniel Wagner contributed to this article.

Original article can be found at: http://www.huffingtonpost.com/2010/09/17/obama-names-elizabeth-war_n_721307.html

[TampaYankee]

I give him a thumbs up for forging ahead to do this. I believe she is the best person to launch this agency.

Whether he feels she is the best choice or that failure to appoint her would piss off and further deflate the Democratic base this election season, I do not know or care really. That is is done is enough. Not understandable why there seemed so much earlier opposition feom Geitner, Summers and Dodd. I'm happy to see it overcome finally.

Also to hold the launch of this agency hostage to GOP filbuster would demonstrate more weakness in Obama carrying forward his agenda. There has been too much stuttering in his agenda already. Failure to move crisply ahead with is agenda has exacted a high cost on the Democrats to date. Nothing to be gained by more of the same.

[lookin]

Not understandable why there seemed so much earlier opposition feom Geitner, Summers and Dodd.

Larry Summers was one of the gang, along with Alan Greenspan, Robert Rubin (Geithner's mentor), and Arthur Levitt, who put the kibosh on Brooksley Born's 1998 plan to regulate the $25 trillion derivatives market. They won that time, and the ensuing financial excesses nearly cratered the economy ten years later. These guys do not like regulation.

"If you're a credit provider, you're sitting there wondering what types of products you're offering will be second-guessed later as unfair, deceptive or not approved," Hirschmann said. "If you don't know what the speed limit is on the road and you knew there were cops out there trying to catch you, that would make you reluctant to drive."

Good. If they don't know what a safe speed limit looks like, they shouldn't be driving anyway. Again, these are the same hand wringers that said regulating credit default swaps and all those other cockamamie derivatives would bring the financial market to its knees. If you ask me, better it stay on its knees for a while instead of hurtling us all into another ditch.

I'm with you, TampaYankee. Obama deserves a thumbs up for trying to rein these guys in. Given what we've learned during the past two years, I think he'd be irresponsible to let them get behind the wheel again before he puts some guardrails up.

[Guest Conway]

This week, I got the new guidelines from my bank as to what this brave new regulation will cost me.

I no longer will have free checking. I will be charged if my balance falls below $5,0000 a month. And, i will earn no interest on that $5,000.

If I move my money from my savings account to my checking account more than twice a month, it will cost me $12 a transaction.

My bank will pay my overdrafts only if I consent to a non-negotiable fee in advance.

My late payment fee on my credit card is going from $19 a month to $27 a month. My credit card will only pay on over advances if I agree to a $36 fee (even if the over advance in a dollar) in advance.

Now, this won't really cost me much of anything as I'm a very responsible guy when it comes to my money. What it will hurt is low income, less educated customers who will be subject to these fees while my bank pays for the new regulatory cost of this overhaul.

Congrats, Obama. You won and moderate income people will lose.

[lookin]

Last November, while the health care reform package was being debated, my insurance company decided to raise my Medicare Advantage plan cost from $0 to $1000 a year. They didn't know what any possible reforms were going to cost them, but they were pissed, and decided to reach into my pocket for an extra thousand bucks, just in case. I sent the info off to the state insurance commissioner's office as an example of abusive practices, and let them deal with it. Of course, the insurance companies couldn't justify their rate increases, and were forced to back off.

I'm sure the banks are pissed off too at the very idea of someone telling them how much they can charge, and they're making some preemptive strikes of their own. I haven't heard from my large bank yet, but I'm sure I will. So I'm in the process of finding a smaller regional bank I can move to, just in case.

It wasn't easy changing insurers at the last minute, and it won't be easy changing banks after twenty-five years. But I will.

I agree with you that there will be a bunch of less informed, less flexible, customers who will just have to sit still and take whatever these large companies try to shove up their ass, just as they have been bending over for the last decade or so. Sadly, I don't think the average consumer is a match for some of these large financial institutions.

So who will be their advocate if they can't advocate for themselves?

I'd like to think that the insurance companies and the banks will have a change of heart and balance their need for profits and bonuses against their customer's need for a fair shake. I'd also like to think that the Republicans, including the Tea Party, will include consumer protection as part of their economic platform. But I'm having trouble finding evidence of that right at the moment.

Any encouragement you or anyone else can provide will be most welcome.

[TampaYankee]

This week, I got the new guidelines from my bank as to what this brave new regulation will cost me.

I no longer will have free checking. I will be charged if my balance falls below $5,0000 a month. And, i will earn no interest on that $5,000.

If I move my money from my savings account to my checking account more than twice a month, it will cost me $12 a transaction.

My bank will pay my overdrafts only if I consent to a non-negotiable fee in advance.

My late payment fee on my credit card is going from $19 a month to $27 a month. My credit card will only pay on over advances if I agree to a $36 fee (even if the over advance in a dollar) in advance.

Now, this won't really cost me much of anything as I'm a very responsible guy when it comes to my money. What it will hurt is low income, less educated customers who will be subject to these fees while my bank pays for the new regulatory cost of this overhaul.

Congrats, Obama. You won and moderate income people will lose.

I remain totally unconvinced of your position, in the large. Sure, there will be changes. There should be!! I'm down with that. Some people will be adversely affected I'm sure. I'm also pretty sure some were skating on others to absorb the cost of the services they were using. I'm probably in that group.

First, you are free to shop other banks for a better deal. I recommend it. When my bank got swallowed up by a bigger bank with a rate schedule I disagreed with I dropped them like a hot potato. It happened to me more than once. I found a bank that suited my needs and idea of fair fees and I have been with them for years.

Second, I'd rather pay a fair fee for a fair service than get screwed when when I accidentally screw up. The former policies often preyed on the poor and the marginal.

I have free checking now. I have free bill-pay too. I love it. Free checking arose out of competitive pressure and the fact that banks get an enormous benefit off the interest-float of that money sitting in accounts. The margins on that avenue of income may have shrunk in the present times. That banks may feel they need to charge for checking doesn't bother me as long as it is a fair reflection of the cost of the service and fees are competitive. Remember also that the cost of processing a check today is a fraction of the cost of days past. Everything is electronic, the number of people involved is minisucle by comparison.

Bill-pay saves me the price of a stamp plus the effort to write and record checks and balance check books. (I hate writing and mailing checks.) I would gladly pay that price of a stamp to the bank for each transaction if they demanded. That is a fair price for a fair service. I have no problem paying a fair fee for a checking acount if demanded. I prefer a per check charge as I write so few but I understand there is an overhead cost too. So just as long as it is fair and competitive.

Under the new law I was notified that I had been approved for overdraft protection at a per event charge of either $29 or $36, I do not recall now. I am thankful for that notification by law. I declined. I appreciate that the law required them to notify me rather than just charge me after the fact which had been done on rare occasion in the past. The responsbility for my account is mine not theirs. Some people want that protection. Fine. Notify them and let them sign up.

IMO credit card late payment fees have always been a rip off. The fact that they remain so is no suprise to me. The fact that your bank is raising it is also no suprise. Other banks have already been charging that rate level. It is a fee that we can choose to pay or not by our charing practices.

I do not see why we as consumers should expect free services at the expense of others who are tricked and trapped with unfair business practices IMO. I don't understand why banks are not satisifed to base their business model on fair fees for fair services documented in plain language in plain sight, not embedded in a volume of legalize. That used to be the business model and it worked.

I just do not buy into the notion that more people get better service if we are allowed to practice deceitful policies that trick and trap customers. Fair fees for fair services. What is so immoral about that?

[JKane]

This week, I got the new guidelines from my bank as to what this brave new regulation will cost me.

I no longer will have free checking. I will be charged if my balance falls below $5,0000 a month. And, i will earn no interest on that $5,000.

If I move my money from my savings account to my checking account more than twice a month, it will cost me $12 a transaction.

My bank will pay my overdrafts only if I consent to a non-negotiable fee in advance.

My late payment fee on my credit card is going from $19 a month to $27 a month. My credit card will only pay on over advances if I agree to a $36 fee (even if the over advance in a dollar) in advance.

Now, this won't really cost me much of anything as I'm a very responsible guy when it comes to my money. What it will hurt is low income, less educated customers who will be subject to these fees while my bank pays for the new regulatory cost of this overhaul.

Congrats, Obama. You won and moderate income people will lose.

Whatever you do don't blame your bank, blame Obama! There are credit unions and plenty of other banks that would treat you better, and I agree with TY that you are reading the situation wrong. And certainly blame Obama for current interest rates! Doesn't every economist in their right mind agree that a raise in interest rates would crater the economy?

Having to agree in advance to a defined fee for overdraft is better for the poor than growing to live on them and being eaten alive by hundreds of dollars in fees every month! Especially when the bank does all kinds of shady things to heighten those fees, which thanks to the much needed regulation you refer to they're no longer allowed to do, such as clearing big payments before smaller payments so you get multiple overdrafts.

How the fuck people can sit a crater caused by deregulation and insist that it's the answer, that it *will* work ONE OF THESE TIMES when so far it never has is dumbfounding.

It is by definition not a right, but a DUTY of government to regulate or even run infrastructure critical to the nation: Environmental impacts of oil production, especially near critical wetlands. National security including the screening of airport passengers. Anti-trust actions against monopolies and companies that get too big to fail.

It's funny how your invisible hand never actually works yet you have endless faith in it.