Senate Dems Urge Republicans To Side With Main Street, Confirm Consumer Bureau Chief

By Andrea Salazar

Senate Banking Committee Democrats called on Republicans Wednesday to vote to confirm Richard Cordray —  the president’s nomination for director of the Consumer Financial Protection Bureau.

President Obama nominated Cordray, a former Ohio attorney general, to head the bureau in July. However, Senate Republicans have promised to block his confirmation until the agency’s powers are limited.

But at the Wednesday news conference in support of Cordray’s nomination, Sen. Robert Menendez (D-N.J.) argued that Cordray’s confirmation is necessary to keep community banks and credit unions competitive.

“You put them at a competitive disadvantage by not having a director, because payday lenders, check cashing places, pawn brokers, the types of loans going to military families, that all goes largely unregulated without a director at the Consumer Financial Protection Bureau,” Menendez said.

The Consumer Financial Protection Bureau is a federal agency that came out of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Its mission, as stated on the bureau’s website is to “make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

Sen. Jack Reed (D-R.I.) said that not confirming a director is “sort of like saying, ‘sorry, you can’t have a commissioner of the FDA until you repeal all the food, drug and safety laws in the country.’ Doesn’t make sense.”

The Senate is expected to vote on Cordray’s nomination Thursday.

“Voting for Richard Cordray means you’re on the side of people on Main Street. Voting against him, means you’re on the side of Wall Street,” Menendez said.

Time To Act On Financial Reform Is Now, Says Dodd

Citing the urgent need to repair the nation’s ailing financial system, Sen. Chris Dodd (D-Conn.) unveiled his own financial regulatory reform plan on Monday.

Dodd, who presides over the powerful Senate Banking Committee, said although a package he had been working on with fellow committee members Richard Shelby (R-Ala.) and Bob Corker (R-Tenn.) was close to being finished, he decided he could no longer wait for them to help put forth legislation.

“Nearly seven million have lost their homes to foreclosure over the last several years. Millions more have lost their retirement funds or their small businesses...Americans are frustrated...and they wonder if anyone is looking out for them...It is certainly time to act.”

In an attempt to prevent future collapses of both the housing and credit markets, Dodd’s plan would do four main things: First, it would abolish the belief that certain banks and financial institutions are “too large to fail,” ensuring that taxpayers would not again be asked to help bail out firms that fall into trouble. Next, it would create a new independent consumer protection agency (CFPA) to serve as a watchdog over various financial products, and would also establish a council tasked with identifying threats to the nation’s economic stability. Finally, it would increase the transparency by which complex financial tools such as hedge funds and derivatives are regulated.

“The legislation I’m offering is comprehensive in its scope because the crisis it aims to solve is comprehensive in its scope,” Dodd said.

While the plan has bipartisan agreement on several of its provisions, Dodd acknowledged that it currently lacks bipartisan support. Additionally, Dodd hesitated to say that the plan would even receive the blessing of every Democrat on the committee.

There are a few reasons for this. First, lawmakers and outside experts are skeptical over whether housing the CFPA inside the Federal Reserve (Fed) is a good idea. Those skeptics argue that the Fed contributed largely to the economic decline, and thus should not be given increased authority. During his press conference however, Dodd insisted that the CFPA would be an independent body, under no command of the Fed.

Another area of concern for some is that smaller-to-medium-sized banks would be needlessly subjected to tightened regulation under the legislation. But Dodd assured that firms with assets valued at under $10 billion would be excluded from increased oversight.

“We must restore confidence and optimism in our economy, accountability in our markets and stability to our middle class,” he said.

The hardest part for Dodd will now, of course, be getting the votes necessary to pass his plan. With the debate over health reform having renewed an atmosphere of partisanship in Washington, Dodd’s legislation will probably be viewed as too politically risky by moderates and conservatives who face re-election this year. Yet on Monday, Dodd -- who has announced he will not be running for another term in office -- viewed the prospects of passage with an almost defiant sense of confidence.

“We will have financial reform adopted this year in the Congress of the United States.”

Geithner: Man of the hour

by Christina Lovato, University of New Mexico-Talk Radio News Service


Today after the trillion dollar stimulus package passed, Timothy F. Geithner, Treasury Secretary, addressed the issue of a Financial Stability Plan that he is proposing to establish. Geithner said “One reason why this crisis is so damaging and has become so acute is because we did not move soon enough to recognize scale of risks this country faced and put together a comprehensive program.”

The plan includes a Capital Assistance Program which includes a “stress test” for the financial institutions. It would require an assessment of whether these institutions have the capital necessary to continue lending money. It also includes a public/private Investment Fund which would be utilized by public financing to leverage private capital.

The public would have access to view where this money would be going to and to whom as well. It is called the “Taxpayers’ Right to Know.” All of the information reported to Treasury by recipients of capital assistance will be posted on a website called financialstability.gov. “The American people will be able to see where their tax dollars are going and the return on their government’s investment. They will be able to see whether the conditions we placed on banks are being met and enforced. They will be able to see whether boards of directors of institutions receiving assistance are being responsible and careful with taxpayer dollars and how they’re compensating their senior executives.” said Geithner.

Geithner also stated that this lending program will be built on the Federal Reserve’s Term Asset Backed Securities Loan Facility, which was announced last November, with capital from the Treasury and financing from the Federal Reserve.

Madoff, no red flags?

"His fraud is note worthy for its duration, it may well have lasted for decades, and the amount of money investors lost which was nearly 50 billion dollars but for all of his deception Mr. Madoff was right about one thing, the public really didn't understand nor it appears did the regulators, " said, Senator Christopher Dodd (D-CT), Chairman of the Senate Banking and Urban Affairs Committee.

Today a Full committee hearing was held regarding the Madoff fraud case. Mr. Madoff was not only a successful businessman but former chairman of the NASDAQ stock exchange. At the hearing committee, members discussed how the Securities and Exchange Commission (SEC) failed to detect fraud and left violation undetected. Intense and uncomfortable questions were directed to Lori Richard's, director of the Office of Compliance, Inspections and Examinations at the SEC and Linda Thompson, director of the SEC's Division of Enforcement. Their key focus was to confront the failed regulatory system which resulted in the terrible and dramatic affects for thousands of investors over a significant period of time. Chairman Dodd revealed that the fraud went undetected until Madoff confessed and noted that his assets have been frozen in the firms along with current ongoing investigations.

The hearing indicated that pension funds, municipalities, charities and individuals along with banks drastically lost money due to Madoff. A witness, John Coffee, professor of law at Columbia University Law School gave his testimony revealing shocking numbers that in 2002 9.6 billion dollars was lost by the fraud schemes. Ranking member of the committee Richard Shelby (R-AL) not only indicated that the SEC missed vital opportunities to detect fraud but also included the Financial Industry Regulatory Authority in the carelessness which was glazed over.

"I want to be clear Mr. Chairman. I'm not suggesting that individuals within our regulatory structure are responsible for the Madoff scandal. The blame here is easily assigned. Madoff and anyone who assisted him in caring out the fraud are responsible. Rather today I'm suggesting that our regulator's experience with the Madoff firm over the years did present opportunities to intervene but they didn't." said, Ranking member Richard Shelby (R-AL)

by Candyce Torres, University of New Mexico-Talk Radio News Service

Financial investment firms compared to "spoiled teenagers"

As far as Senator Chris Dodd (D-Conn.), Chairman of the Senate Banking, Housing and Urban Affairs Committee, is concerned, there must be a “heightened sense of urgency” about the enactment of the Emergency Economic Stabilization Act. At a full committee hearing on the turmoil in the United States credit markets, the committee heard from Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation; Neel Kashkari, interim assistant secretary for financial stability and assistant secretary for international affairs at the Treasury Department; Brian Montgomery, federal housing commissioner and assistant Housing and Urban Development secretary; Elizabeth Duke, member of the Federal Reserve Board of Governors; and James Lockhart III, director of the Federal Housing Finance Agency.

The opening statements included Senator Charles Schumer’s (D-N.Y.) comparison of the financial investment firms in question to “spoiled teenagers” who threw a house party while their parents were out of town. Schumer said the financial crisis was “not unforeseeable” and that the Treasury must issue guidelines for future banking endeavors now that taxpayer money is involved. Senator Bob Menendez (D-N.J.) believes that if 9800 Wall Street jobs were lost everyday, like they were lost for millions of Americans, the financial problem would have been solved long ago. He then stated that the “funds are not a gift” from taxpayers to banks and that must be made clear through oversight and compliance.

In her testimony, Chairwoman Sheila Bair advised the necessity to recapitalize banks in order to reverse the “confidence problem” happening in America. She said this recapitalization would be similar to that of European banks and would help in the area of liquidity. She also advised that to help homeowners, the FDIC would work with the Senate Banking Committee and Treasury Department to prevent future foreclosures and create sustainable mortgages. Neel Kashkari said that to help financial institutions, the Treasury Department had created seven policy programs including an equity purchase program, a homeownership preservation program, and an executive compensation program. Kashkari believes that the Treasury has “accomplished a great deal in a short period of time,” but stated that it may not be until the end of the year before the $250 billion is allocated to chosen banks.