New Democrat Coalition Guts Meaningful Consumer Protection In Wall St. Reform

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Of course they did. After all, you can't make all those big donors unhappy, right? The amount of corruption in our political system has far outstripped our ability to change it. The NDC thinks our nation is ill-served by state laws that are more difficult to game on behalf of the financial services industry.

Is there anything they won't do to screw us?

The compromise reached late Wednesday between pro-reform House Democrats and the banker-friendly wing of the party could significantly weaken consumer protection in states where lawmakers support tougher rules against tactics such as predatory lending and excessive ATM fees than historically submissive federal regulators.

Members of the New Democrat Coalition -- whose deference to big banks is reflected in the massive amounts of money they have taken from the financial services industry since 2008 -- temporarily blocked the landmark financial regulatory reform bill from hitting the House floor on Wednesday.

At issue was whether federal regulations should be a floor or a ceiling for consumer protection in the states, particularly as they affect big national banks like JPMorgan Chase, Citibank, Bank of America and Wells Fargo.

The Obama administration, Financial Services Committee Chairman Barney Frank, state attorneys general and a coalition of consumer advocates and law professors want states to be able to enforce tougher consumer financial protections.

The big banks, obviously, want federal regulations -- which they have found relatively easy to influence -- to preempt any more onerous state rules for banks operating in more than one state.

Working on behalf of the big banks, the New Dems were able to extract a compromise that will allow federal regulations to preempt state laws on a case-by-case basis.

State regulators have extracted billions of dollars from predatory lenders over the past decade through fines and court settlements, and state legislatures adopted strong anti-predatory lending measures years before Congress. Federal regulators were largely absent from the fight to protect consumers or acted too late, consumer advocates argue.

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