In case you haven’t heard, the Senate fell short of the 60 votes needed to confirm former Ohio Attorney General Richard Cordray as the chief of the Consumer Financial Protection Bureau (CFPB). The vote was 53-45 along party lines, falling 7 votes short. Elizabeth Warren, currently running to unseat Scott Brown in Massachusetts, was the architect of the CFPB. When it came time to nominate the first chief of the new bureau, Barack Obama passed over Warren in spite of the fact that she was the favorite. Again, as has happened so many times during his administration, Obama caved in to the protests of the GOP about naming Warren. It should be noted, however, that it wasn’t just the GOP who didn’t want Warren. Timothy Geithner, a Wall Street player (and one of the chief perpetrators of the economic meltdown) and Obama’s Treasury Secretary, was against naming Warren as well. Cordray was second choice. The reality is that the GOP simply doesn’t want to reign in Wall Street and, frankly, neither does Barack Obama. In this age of the Occupy Movement and the 99%, one would think that both sides would get the message. Don’t kid yourselves. The Democrats don’t “get it” any better than the GOP.
Senate Majority Leader Mitch McConnell (the ultimate boil on the ass of progress) insists the issue is not so much Cordray as it is the desired structural changes that must be made to the bureau. According to McConnell, the public wants more accountability and transparency than it is getting, and Barack Obama is ignoring the wishes of the American people. Let’s face some real facts here. The GOP doesn’t want to reign in Wall Street at all. And Barack Obama wants to give the appearance of reigning in Wall Street. After all, it’s an election cycle and the finger-pointing is in high gear.
Without a confirmed leader, the CFPB is fundamentally impotent. It cannot regulate financial products from non-banks, and that includes student loan providers, debt collectors, payday lenders and check cashers who prey on the American public. More importantly, it cannot regulate mortgage originators and servicers. These are the entities who played a huge role in the financial meltdown by offering subprime mortgages to families who couldn’t afford them, which led up to the biggest economic collapse this country has seen since the Great Depression. This suits the GOP just fine.
On the other side of the aisle we have Barack Obama, who insists he is considering all his options including a recess appointment. This would allow Cordray to serve as the head of the CFPB through December 2012 when the fight will begin anew, no doubt. This tactical move would suit Obama just fine since presidential politics will be playing full tilt boogie until next November. It would give the appearance that he means business when it comes to helping the consumer (read: the middle class). However, it’s time to get down to the real nitty-gritty about Barack Obama and the whole “we need to change Wall Street’s culture” thing. You really have to get past the political rhetoric. Barack Obama is the master of making Americans believe he’s the agent of “change we can believe in.” The reality is quite different.
I could enumerate all of the things that counter his “agent of change” image where Wall Street is concerned. It would take another thousand words at least. First, I’ll get on my favorite soap box: Timothy Geithner as Treasury Secretary. Really? The man who was head of the New York Federal Reserve during the economic meltdown was also one of those who helped facilitate the decision for AIG to pay Goldman Sachs 100 cents on the dollar for its bets against mortgages. During his confirmation hearings, Geithner insisted “I have never been a regulator.” Why didn’t that send up red flags? I’m still trying to figure out why Geithner is still Treasury Secretary. Barack Obama knows why: Nothing is going to change with Geithner as Treasury Secretary. After all, he was a key player in making sure that the one person who would bring us “change we can believe in,” Elizabeth Warren, was passed over for head of the bureau. In fact, Obama’s senior economic advisers are the people who made the economic meltdown possible. Obama’s first Chief Economic Adviser was Larry Summers who, as Treasury Secretary in the Clinton administration, played a critical role in the deregulation of derivatives. The (dirty) laundry list of thieves in the Obama administration appears in this great article by William Brighenti on The Barefoot Accountant blog.
Since President Obama’s election, not one senior financial executive has been prosecuted (or arrested), no special prosecutor has been appointed, and not one financial firm has been criminally prosecuted for securities or account fraud. The only person who has gone to jail is Bernie Madoff, who preyed on other really stupid rich people. Meanwhile, those who have been responsible for the average American losing their homes and savings are conducting business as usual. The proof is in the recent failure of brokerage firm MF Global, under the leadership of Jon Corzine, former New Jersey Governor and an ally of Barack Obama. In a 2008 ad, Obama said “You’ve got corporate executives who are giving themselves million dollar golden parachutes and leaving workers high and dry. That’s wrong. It’s an outrage.” He called for capping the pay of executives whose firms receive bailout money at half a million dollars.
Jon Corzine today told a congressional committee that he doesn’t know what happened to $1.2 billion in missing customer funds. Yet, Corzine is reportedly receiving a $12.1 million severance package. This is all happening because nothing has been done to reign in Wall Street or its executives since the economic armageddon of 2008. It is happening because none of the individuals or firms have been held accountable since 2008. This kind of economic malfeasance will continue until something concrete is done.
In the meantime, Elizabeth Warren presses on as she has since she was Special Assistant to President Obama in the wake of the economic crisis. Today I received an email from Warren asking for people to sign on to hold Wall Street accountable. Warren also published an op-ed piece on Politico on this subject. Ironically, Warren points out that Massachusetts Attorney General Martha Coakley (who lost the senate election to Scott Brown) last week filed a lawsuit against the five largest mortgage servicers in Massachusetts to eliminate the stalling practices and hold those responsible for the Massachusetts meltdown accountable. As Warren so eloquently states, and I’m paraphrasing, it’s not just for those who were wronged, but to level the playing field going forward.
If we cannot do this on a national level with the involvement of Clowngress (no, it’s not a typo), it’s up to the states Attorneys General to follow in Coakley’s footsteps.
Categories: Consumer Financial Protection Bureau, Financial Fraud, The 99%, Wall Street
Elizabeth Warren is leading today in the polls: 49% to 42%. Too bad she is not running for President!
Great article. Thank you. I just published something on why so few financial fraud investigations: “Is Sarbanes Oxley dead? Why are financial fraud investigations down 57% after the biggest financial fraud in our country’s history?” You can find it at http://www.cpa-connecticut.com/blog/?p=4558