Later On

A blog written for those whose interests more or less match mine.

How Wall Street wins on the Hill

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Ryan Grim and Arthur Delaney in the Huffington Post:

The question was simple: Should the lending practices of auto dealers be regulated?

It was already October and the 42 Democrats and 29 Republicans on the House Committee on Financial Services had spent the better part of the year hashing out the details of a new federal agency dedicated to protecting consumers from dangerous and deceptive financial products.

Auto dealers seemed like an obvious target for the new agency; nearly every time someone buys a car, the dealer also sells them an auto loan, complete with promises like zero per cent interest and a pile of cash back. Americans hold some $850 billion in car debt and dealers are responsible for marketing roughly four-fifths of that amount. They pocket lucrative commissions with little oversight, and the committee seemed poised to change that.

Enter Rep. John Campbell (R-Calif.), a former Saab dealer from Orange County, who according to his latest financial disclosure statement still collects rent from some of his former auto dealer colleagues. Campbell downplayed the importance of his industry partners and proposed an amendment to the bill exempting dealers from the new agency’s purview. On October 22, it came up for a vote.

As usual, the members filed into the high-ceilinged first-floor hearing room in the Rayburn House Office Building. Committee Chairman Barney Frank oversaw the vote atop four tiered rows of seats, a full story above the witnesses and the audience. The longest-serving Democratic members of the panel — informally known as the banking committee — sat to the right or just below the chairman; it can take years, if not decades, for a freshman representative to ascend up the risers.

The clerk called the roll, starting from the top. Senior Democrats roundly rejected Campbell’s amendment. It appeared as if the Democrats would beat back the effort and apply the same standard to car dealers that was applied to everyone else.

Then came the bottom two rows, the place where reform goes to die. Despite the disapproval of the powerful chairman and nearly every consumer group in the country, the Campbell amendment passed by a 47-21 margin.

In the fall of 2008, Democrats took the White House and expanded their Congressional majorities as America struggled through a financial collapse wrought by years of deregulation. The public was furious. It seemed as if the banks and institutions that dragged the economy to the brink of disaster — and were subsequently rescued by taxpayer funds — would finally be forced to change their ways.

But it’s not happening. Financial regulation’s long slog through Congress has left it riddled with loopholes, carved out at the request of the same industries that caused the mess in the first place. An outraged American public is proving no match for the mix of corporate money and influence that has been marshaled on behalf of the financial sector.

The banking committee is the second-largest in Congress — the Transportation and Infrastructure Committee has three more members — and is known as a “money committee” because joining it makes fundraising, especially from donors with financial interests litigated by the panel, significantly easier.

The Democratic leadership chose to embrace this concept, setting up the committee as an ATM for vulnerable rookies. Eleven freshman representatives from conservative-leaning districts, designated as “frontline” members, have been given precious spots on the committee. They have individually raised an average of $1.09 million for their 2010 campaigns, according to the Center for Responsive Politics; by contrast, the average House member has raised less than half of that amount.

Raising that much money, even with a golden seat on the committee, takes an awful lot of time. The Democratic Congressional Campaign Committee (DCCC) pushes members to do as much “call time” with potential donors as is physically possible from the moment they win election — which doesn’t leave much time for legislating…

Continue reading. There is a lot more, much of it disheartening but important to know.

Written by Leisureguy

31 December 2009 at 11:46 am

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