Reid’s caving on the filibuster bears its first rancid fruit
Paul Krugman focuses on the destruction of consumer protection:
Like many advocates of financial reform, I was a bit disappointed in the bill that finally emerged. Dodd-Frank gave regulators the power to rein in many financial excesses; but it was and is less clear that future regulators will use that power. As history shows, the financial industry’s wealth and influence can all too easily turn those who are supposed to serve as watchdogs into lap dogs instead.
There was, however, one piece of the reform that was a shining example of how to do it right: the creation of a Consumer Financial Protection Bureau, a stand-alone agency with its own funding, charged with protecting consumers against financial fraud and abuse. And sure enough, Senate Republicans are going all out in an attempt to kill that bureau.
Why is consumer financial protection necessary? Because fraud and abuse happen.
Don’t say that educated and informed consumers can take care of themselves. For one thing, not all consumers are educated and informed. Edward Gramlich, the Federal Reserve official who warned in vain about the dangers of subprime, famously asked, “Why are the most risky loan products sold to the least sophisticated borrowers?” He went on, “The question answers itself — the least sophisticated borrowers are probably duped into taking these products.”
And even well-educated adults can have a hard time understanding the risks and payoffs associated with financial deals — a fact of which shady operators are all too aware. To take an area in which the bureau has already done excellent work, how many of us know what’s actually in our credit-card contracts?
Now, you might be tempted to say that while we need protection against financial fraud, there’s no need to create another bureaucracy. Why not leave it up to the regulators we already have? The answer is that existing regulatory agencies are basically concerned with bolstering the banks; as a practical, cultural matter they will always put consumer protection on the back burner — just as they did when they ignored Mr. Gramlich’s warnings about subprime.
So the consumer protection bureau serves a vital function. But as I said, Senate Republicans are trying to kill it.
How can they do that, when the reform is already law and Democrats hold a Senate majority? Here as elsewhere, they’re turning to extortion — threatening to filibuster the appointment of Richard Cordray, the bureau’s acting head, and thereby leave the bureau unable to function. Mr. Cordray, whose work has drawn praise even from the bankers, is clearly not the issue. Instead, it’s an open attempt to use raw obstructionism to overturn the law.
What Republicans are demanding, basically, is that the protection bureau lose its independence. They want its actions subjected to a veto by other, bank-centered financial regulators, ensuring that consumers will once again be neglected, and they also want to take away its guaranteed funding, opening it to interest-group pressure. These changes would make the agency more or less worthless — but that, of course, is the point.
How can the G.O.P. be so determined to make America safe for financial fraud, with the 2008 crisis still so fresh in our memory? . . .
Alex Pareene in Salon puts the blame for this where it belongs: on the “leadership” of Harry Reid in seeing that the filibuster was preserved:
It was very fitting that pretty much immediately after Harry Reid ended the possibility of filibuster reform in the more-sclerotic-than-ever U.S. Senate, a Republican appointee-run court effectively killed the recess appointment. Reid cut a “deal” on filibusters that actually strengthened the 60-vote threshold, by legitimizing what had been widely seen by non-senators as unprecedented abuse of Senate rules. All the deal does is speed up the process of breaking a filibuster with 60 votes, making the act offorcing a 60-vote threshold on all Senate business — something that rapidly became the new normal — even more painless than it was before.
Right after Mitch McConnell was granted unelected co-leadership of the Senate, the D.C. Court of Appeals announced that we’ve been doing this whole recess appointment thing all wrong for the last century or so, and that the Founders only intended for presidents to make recess appointments during “the Recess,” between sessions, and only of positions that became vacant during that recess. This allows Senate Republicans to totally prevent Barack Obama from appointing anyone to the National Labor Relations Board and the newly created Consumer Financial Protection Bureau. Not just “people Republicans disapprove of,” but anyone at all, because Republicans disapprove of those two agencies carrying out their missions.
Now, naturally, after Reid cut the deal allowing them to do so without consequences, Republicans wasted no time in announcing their intention to prevent Barack Obama from appointing anyone to run the CFPB unless he effectively restructures the agency to not serve its purpose. This is, as a couple of others have noted, effectively “nullification,” and it’s generally frowned upon by fans of functioning republican forms of government.
The signs of the total normalization of what would have been considered a shocking violation of political norms just a few years ago are all over the Reuters story on Republican intentions. The story presents it as a typical political fight, one side against the other, both lobbing accusations and impugning the motives of the other. One subheadline reads, helpfully, “POLITICS AT PLAY.” Typical Washington, always with the politics! Why can’t No Labels just get these jokers to get along?
The story begins by quoting Republicans, who have objections to the board, and then quoting Democrats, who say they think the board is a good thing. Toward the end is the part that should’ve been near the top, along with some indication that it’s an insane state of affairs:
For the most part, Republicans and business groups have said they do not oppose Cordray personally, saying he has been accessible and the bureau has tried to incorporate comments from both industry and consumer advocates in its rules.
But the senators said “common sense reforms” are needed before they will confirm anyone to lead the bureau.
In other words, 43 Republicans — not a majority of the Senate, at all — have pledged to block the appointment of someone they have no real issue with, because they are demanding the right to change the structure of the agency entirely before they will allow it to function. A small minority in one of America’s two congressional bodies is demanding the right to fundamentally rewrite, on their own terms, a law passed by both houses and signed by the president, because they really dislike it. That’s not normal, “what are you gonna do?” politics. That’s setting an insane precedent. . .