This pretty much says it all: General Petraeus is going to Afghanistan at the President's request to lead the war effort there, but his wife Holly's struggle to defend our troops against the predatory lending practices of car dealers has been lost. Holly will become another military spouse who lost a battle with car dealers while a loved one serves overseas. Both Houses of Congress are apparently willing to "support the troops" only when it doesn't get in the way of doing favors for the guys raising money at those rubber-chicken campaign fundraisers back home.

Let's hope the General has better luck against Mullah Omar than his wife had against Tony Federico. Tony's the auto dealer we wrote about the other day - the one who says he always gets the best deals for his customers, but doesn't want anyone checking to see if that's true or not. In this Congress, the score is now Tony 1, Holly 0.

The House/Senate Committee approved a carve-out for auto dealers that exempts them from oversight by the Consumer Financial Protection Bureau. There are no good policy reasons for that. The argument that "car dealers had nothing to do with the economic crisis" doesn't wash. As Jeff Sovern observed in Politico, reform is designed to prevent the next crisis as much as it is to avoid a repeat of the last one. With nearly a trillion dollars a year written in auto loans each year, and with auto dealers having the same perverse incentives as mortgage brokers, it's a tragedy waiting to happen.

And it's a tragedy that is happening - every day, in communities all over the country. Holly Petraeus stepped in because she was one of many military family members who grew tired of seeing soldiers exploited by fast-talking bait and switch artists at a vulnerable and frightening time in their lives. When it push comes to shove, gladhanding contributors was more important to Congress than looking out for the interests of our soldiers ... and other ordinary citizens. The racially discriminatory patterns behind auto lending didn't disturb them, either, nor did the average of $647 added to the cost of each vehicle as a result of dealer markups. (More info here and here.)

Negotiators are working to undo a little of the damage done by this decision. As the AP reported yesterday, auto dealers will still be covered by Federal truth-in-lending laws, although the Fed will have to write a justification every time it tried to write rules that specifically deal with auto loans. And there's a plan to create a "fast track" for the Federal Trade Commission to write rules that address auto loans.

But these are band-aids on the gaping wound created by this sweetheart deal. Every lender but one will have to answer to the Consumer Financial Protection Bureau, leaving a messy and confusing two-tiered oversight system that's ripe for exploitation.

We promoted the CREDO/Campaign for America's Future fax campaign last week, saying " Send a fax. Call your Senator and Representative. If you do, we can have you in a nice financial reform package, complete with consumer protections against auto dealer rip offs." Apparently I was overselling - which may qualify me for a job at an auto dealership - but send the fax and make the call anyway. That will let them know you're unhappy, and that you want the FTC and the Federal Reserve to push for the strongest possible regulations. And let the Senators who voted to encourage Tony's giveaway (my Senator, Barbara Boxer, is one of them) know you want them to push for real oversight of these loans.

General Petraeus specializes in counterinsurgency, which is defined as "armed conflict against an insurgency by forces aligned with the recognized government of the territory in which the conflict takes place." Too bad he didn't share some of his techniques with his wife before she went to plead her case before Congress. In the battle between our troops and Tony Federico, the troops never really had a chance.

______________________

Cross-posted (with some rewording) at Huffington Post and Our Future as part of the Curbing Wall Street project.

— Photo used under Creative Commons license by Flickr - user bitzcelt.

"What do I have to do to get you into this car?"

"How much can you afford to pay every month?"

"My manager's in a good mood."

They're trying to add a couple more car salesman cliches to the ones everybody knows:

"When you take out a car loan - probably the second-biggest financial decision of your life - you don't need a watchdog looking out for you."

"Watch out ... this will cost you a lot more if somebody's representing your interests."

And if you believe those last two statements, allow me to show you this brand new baby - it's got whitewalls and mag wheels, tinted windows, I'll throw in the deluxe sports package along with that ... oh, and we strongly recommend undercoating.

Campaign for America's Future and CREDO have set up a site where you cen send a fax to Barney Frank and Chris Dodd with a simple one- or two-click process, urging them protect American consumers from shady auto loans. And, if you act now, it's absolutely free! (Racing stripe and rustproofing not included with fax.)

It's easy to sound flippant, since everybody knows why we all hate car dealers, but the topic's deadly serious: As we've discussed at length, auto dealer lending practices are a disgrace. A massive, multi-year study showed that African Americans are charged more than whites for the same loans. Auto dealers routinely mark up the loans they offer, without disclosing that information to customers - a practice that costs consumers $20 billion per year and adds an estimated $647 to the cost of each vehicle sold. Auto dealers also play games with "gap insurance" that covers the replacement cost of your vehicle for loan purposes if it's totaled.

Another common car dealer trick is to "sell" a car to a customer by claiming they qualify for a no-interest or low-interest loan, letting them drive away in it, then calling them a week or two later to say the loan fell through. Dealers do this because most customers will have gotten used to the car by then, which means that many of them will accept loan terms that wouldn't been unacceptable at the point of sale.

Car lenders have made a particular point of preying on young soldiers, who are living far from home in great distress. That's why Holly Petraeus, wife of Gen. David Petraeus, is strongly in favor of regulating auto loans. The Petraeus family are hardly known as big lefties ...

Car dealers and their allies love to say they should be exempted from financial reform because they weren't part of the financial crisis. But think about it: Why should auto loans be regulated when they're provided by banks and credit unions, but not when they're provided by auto dealers? That's anticompetitive. What's more, we've already seen that auto dealers sometimes encourage applicants to lie when applying for a loan. If bank auto loans are regulated but car dealer loans aren't, unscrupulous bankers will simply use car dealers as willing minions to make an end run around consumer protection. With auto lending a nearly $1 trillion market, the last thing we need is a replay of the "no doc" mortgage scandal with car salesmen playing the part of mortgage brokers.

The defend-car-salesmen crowd has a couple more arguments, and a credulous Associated Press commentary by Rachel Beck summarizes them: First Ms. Beck repeats the assertion that lending legislation would affect dentists who allow patients to pay over time (the Senate bill does not and this will undoubtedly be clarified and corrected in conference.) Then, she conflates "family dentists" with auto dealers, as if they were both trusted service providers. (It's true that buying a car is as painful as a root canal, but that's as far as the comparison goes.)

That sleight of hand allows her to come up with this:

Just like the dentists, (auto dealer Tony) Federico says that more regulation will boost his costs. It could mean he does fewer loans, or is less generous in the deals he offers. Consumers then would have to seek out loans elsewhere, which could be less convenient and cost more.

"I am always looking out for my customers' best interests, but I also want to do deals that are worthwhile," Federico says.

So, who are you gonna believe - somebody named "Holly Petraeus," who's concerned about military families, or your trusted family friend Tony Federico? Hey, Tonyyy ...

Tony says you'll pay less getting a loan through him, even when he's done taking his market - and when has a car salesman ever lied? Sure, studies show that he's wrong, but who are you gonna trust here - the Center for Responsible Lending .... or your old pal Tony?

Rachel Beck's piece is embarrassing to read. Why would newspapers run it? Let's not forget that, like politicians, newspapers rely on car dealer revenue for their bread and butter. (Why, the Sun-Times was even willing to cut a deal with the New York Times this week to run luxury car ads in the Chicago market; luxury ads are especially lucrative.) Ad revenue buys a lot of credulity, especially on the editorial pages.

Hey, maybe everybody's wrong but Tony Federico and Rachel Beck. They're not - but let's say for argument's sake they are: Why not support this provision anyway? It doesn't prevent auto dealers from handling loans, it simply provides oversight when they do. If the Federicos of the world are really providing better loans at reasonable rates, there's no reason why the Consumer Financial Protection organization won't simply give them an "attaboy" or "attagirl" and tell them to keep up the good work. (Attaboy, Tony!)

Or look at it the other way: If they're not doing anything wrong, why are they so concerned about a little oversight?

Auto dealers throw a lot of lucrative fundraisers back home for DC politicians. That's why 62 House Democrats have joined their Republican colleagues in pushing for an auto dealer exemption. That's the money talking. Talk back to it: Send a fax. Call your Senator and Representative. If you do, we can have you in a nice financial reform package, complete with consumer protections against auto dealer rip offs, probably by this time next week.

Heyyy ... what a deal.

(modified from a post prepared for the Curbing Wall Street project of the Campaign for America's Future)

DOWNLOADS: (924)

PLAYS: (1370)

Embed

Sen. Bob Corker appeared on Hardball yesterday to talk financial reform and Mitch McConnell's amazing verbatim spew of the Frank Luntz talking points designed to kill any meaningful Wall Street reforms. He took care to point out that he has "never used those Frank Luntz talking points...", confirming the not-too obscure fact that Mitch McConnell has memorized them all and IS using them. (Full text of Luntz memo)

He optimistically predicts final passage of Dodd's bill with 70 Senators voting for it. Of course, Dodd's bill doesn't really have much in the way of derivatives reform. That's Senator Blanche Lincoln's bill.

In fairness to Sen. Corker, he has been the one single Republican who actually tried to find a bipartisan solution to financial reform before the GOP leadership shut down the entire effort.

Joe Conason:

Corker’s conduct exemplifies the Republican strategy (which, in fairness, he may not have fully understood until last week). Having spent months working on the bill with committee chairman Chris Dodd, D-Conn., Corker suddenly found himself vowing to support a filibuster over provisions in the bill that he had helped to write.

If Senator Corker isn't filibustering the bill, then who is the 41st vote? Let me guess...maybe Ben Nelson?

DOWNLOADS: (541)

PLAYS: (2087)

Embed

From This Week with Jake Tapper, an interview with Obama economic advisor Larry Summers:

TAPPER: OK. The president has said he wants -- in the next few weeks, he wants the Senate to pass financial regulatory reform. First of all, just quickly, do you guys have the 60 votes to pass Senator Chris Dodd's bill on financial regulatory reform?

SUMMERS: I expect that reform is going to pass. It's not easy. You've got $1 million being spent per congressman in lobbying expenses on this issue. Industry has four lobbyists per member of the House and Senate working on this.

But the case for basic consumer protection, the case for regulating institutions that are able to bring the economy down and not leaving them completely unregulated, the case that we've got to be able to handle the failure of an institution without a major bailout through so-called resolution authority, the case that we can't let institutions choose their own regulator -- play one regulator off -- against another to reduce standards -- that case is so compelling that we are confident that a sufficient majority will see that case and will vote to support financial reform.

We've come a -- we've come a -- come a long way on this issue. We're now in the final stages. Our expectation is that we will get there, and there's no question, I mean, how can anyone take a position after what has happened, after -- I mean, it's not the first thing that's happened...

TAPPER: Well, some -- some -- some Democrats...

SUMMERS: ... that we don't need -- that we don't need comprehensive financial reform.

TAPPER: Well, some...

SUMMERS: Probably (ph) work on the details, but not compromise on the principles.

TAPPER: Some Democrats say it doesn't go far enough. Here's Delaware Democrat Ted Kaufman talking about the Dodd bill.

(BEGIN VIDEO CLIP)

KAUFMAN: Unless Congress breaks up the mega-banks that are too big to fail, the American taxpayer will remain the ultimate guarantor of an almost certain to repeat itself cycle of boom, bust and bailout.

(END VIDEO CLIP)

TAPPER: Senator Kaufman is saying that there isn't being -- enough being done about too big to fail. In 2000, you said, quote, "It is certain that a healthy financial system cannot be built on the expectation of bailouts." Can you honestly say that the Dodd bill changes that?

SUMMERS: Yes, I can. It changes -- it reduces the expectation of bailouts by insisting that institutions have much more capital so they won't need to be bailed out. It eliminates the prospect of bailout by creating a framework in which a failure can be managed with creditors taking responsibility.

It restricts -- and this was the important point that former Fed Chairman Paul Volcker has stressed -- it restricts the so-called proprietary trading activities, some of the most risky activities of these institutions. So, yes, this bill is a direct attack on too large to fail by making failure a possibility, as it has to be in a market system, and by making these institutions much safer and much sounder. Senator Kaufman is exactly right.

This is a very interesting turn of events.

Bob Corker was looking for Chris Dodd. When the Tennessee Republican got him on the phone, he started to get the feeling that financial regulatory reform talks were collapsing after weeks of negotiations.

"You've been a great partner," Dodd, the chairman of the Senate Banking Committee, told Corker, who had been taking a lead role in the talks.

"My little antennae went up," said Corker in response to Dodd's use of the past tense to describe their partnership. On Wednesday afternoon, the pair met privately and Dodd broke the news: He was moving forward with his party on reform, cutting short negotiations with Corker that have been dragging on for roughly a month.

Dodd (D-Conn.) announced on Thursday morning that he will unveil a bill on Monday without GOP support and he intends to bring it to a vote the following week.

And I believe the pressure we've been putting on Dodd not to fold the CFPA into the FED is one of the major reasons he broke off with Corker.

Corker said that the second pressure point for Dodd was that "members on the left were getting nervous" about where the Consumer Financial Protection Agency would be located. Progressive Democrats have been particularly vocal in their opposition to placing the CFPA inside the Federal Reserve and Dodd was beginning to wonder if he had enough Democratic votes, he said.

The same Democrats are also concerned that the CFPA will lack sufficient independence and authority. But, said Corker, Dodd had accepted a GOP proposal to create a board of regulators with veto power over any rules passed by the CFPA. The panel would include the SEC, FDIC, Fed, Treasury and CFTC.

It looks like Queen Snowe will step in and help in the end.

Democrats, however, do not need Corker to pass the bill. Earlier this week, Sen. Olympia Snowe (R-Maine) told HuffPost that once the bill was out of committee she looked forward to playing a central role in negotiations. She already joined Sens. Maria Cantwell (D-Wash.) and Dianne Feinstein (D-Calif.) in sending a letter to Dodd, calling for tough regulation of derivatives. Dodd's decision to move forward without Republican support in the committee opens the door for Snowe, who's more moderate than Corker and Shelby, to step in.

Corker will probably go on all the shows and do a bipartisan whine for the Villagers to embrace. You know republicans are only watering down the bill as much as possible.

Republicans wanted banking regulators to take the lead in enforcing consumer rules, but Democrats argued that such a system would water down consumer protections

.

Americans unequivocally want strong Wall Street regulations.

An overwhelming majority of Americans wants Wall Street subjected to tougher regulation in the aftermath of the bank bailout and the bonus scandals that have rocked the U.S. financial sector, according to a Harris poll released on Thursday.The findings suggest that 82 percent of Americans want the government to clamp down more strongly on Wall Street excesses, with a particular emphasis on bonus schemes that have rewarded employees at loss-making companies such as American International Group.

John Harwood said on CNBC that Democrats want to get this done sooner than later and that's why they moved in this direction.

This is very, very interesting news. Is the White House serious, or is this a pro-consumer doggie biscuit to keep the left wing off their back? Here's hoping it's the real thing:

WASHINGTON (AP) -- The Obama administration waded into negotiations over Wall Street regulations Wednesday, calling for limits on the size of financial institutions and insisting that consumer protections remain a central objective of legislative attempts to rein in the industry.

In the Senate, talks continued on how to create a consumer protection entity. Republicans pressing for a watered-down consumer agency even as they voiced optimism that they could reach a deal with Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat, within a week.

The Treasury Department circulated proposed legislation that would prevent commercial banks from carrying out high-risk trades and that would restrict the size of financial firms to holdings no greater than 10 percent of the entire financial industry's liabilities. That restriction would apply only to firms that grow through a merger or an acquisition.

Consumer protections and doing away with financial firms deemed too big to fail are two of the key elements of the legislative efforts to overhaul the rules that govern Wall Street and prevent a recurrence of the 2008 financial crisis. In reiterating its points, the administration was making certain its views were being heard in the Senate at a sensitive time in negotiations between Dodd and Sen. Bob Corker, R-Tenn.

Continue reading »

This is a big step in the right direction, and it's something that would go a long way toward easing national insecurity (and not incidentally, expire after the midterms, leaving a possible Republican majority with a ticking time bomb):

With unemployment still hovering in double digits and no real relief in sight, a group of 30 Senate Democrats today is urging party leaders to extend emergency unemployment benefits through the end of 2010 — 10 months longer than current law dictates. In a letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.), the lawmakers argue that shorter extensions might be cheaper, but they leave state budgeters in a state of constant uncertainty.

Short term extensions, while still helpful to families, only add strain to state agencies that must constantly re-tool their computer systems, and at the same time, continue to assist the millions still searching for work. As our economy continues on a path to recovery, we need a robust extension of safety net programs that have provided a lifeline to families since the recession began.

Signing the letter were Democratic Sens. Tom Harkin (Iowa), Bob Casey (Pa.), Jack Reed (R.I.),
 Sherrod Brown (Ohio)
, Chris Dodd (Conn.),
 Jay Rockefeller (W.Va.),
 Jeanne Shaheen (N.H.),
 Al Franken (Minn.), Carl Levin (Mich.),
 Frank Lautenberg (N.J.), Debbie Stabenow (Mich.), 
Roland Burris (Ill.), Arlen Specter (Pa.),
 John Kerry (Mass.), Kirsten Gillibrand (N.Y.),
 Ron Wyden (Ore.), Edward Kaufman (Del.),
 Sheldon Whitehouse (R.I.), Barbara Boxer (Calif.),
 Patrick Leahy (Vt.),
 Robert Menendez (N.J.),
 Herb Kohl (Wis.),
 Tom Udall (N.M.), Ben Cardin (Md.),
 Robert Byrd (W.Va.),
 Daniel Akaka (Hawaii),
 Jeff Merkley (Ore.),
 Barbara Mikulski (Md.),
 Dianne Feinstein (Calif.) and Michael Bennet (Colo.), as well as Independent Sen. Bernie Sanders (Vt.).

Democratic leaders are working on legislation to tackle the continuing problems related to the economic downturn. The package is widely expected to include an extension of unemployment insurance, COBRA health benefits, food stamps and help for states faced with budget crises. They’d hoped to have health care reform out of the way first. Now, that’s looking unlikely.

Ah, may you live in interesting times:

With the 2010 election year barely under way, two senators and one governor — all Democrats — ditched plans to run for re-election in the latest signs of trouble for President Barack Obama's party.

Taken together, the decisions by Sens. Chris Dodd of Connecticut and Byron Dorgan of North Dakota as well as Colorado Gov. Bill Ritter caused another bout of heartburn for Democrats as they struggle to defend themselves in a sour political environment for incumbents, particularly the party in charge.

As 2009 ended, Democrats watched a string of their House members announce retirements and one congressman defect to the GOP.

Some of this is just going to be natural attrition. But it's also obvious that, once again, liberal Democrats have underestimated the power of the media attacks against them, and as always have not even figured out the need for an effective response, let alone how to formulate one.

Oh dear. What can the matter be?

Sen. Chris Dodd (D-Conn.) on Wednesday ripped the Senate's "newest members" for the lack of comity in the upper chamber.

In a floor speech Wednesday night, Dodd said there is "nothing wrong" with partisanship, but added he has "been deeply disturbed by some of the [healthcare] debate I have heard, usually from newer members, usually those who have been here one, two, three years, who do not have an appreciation of what this chamber means and how we work together."

Dodd did not name names, and spokesmen for the Connecticut senator did not respond to requests for comment.

[...] During his speech on Wednesday, Dodd repeatedly revisited his disappointment with the newest members of the Senate: "It is always the newest members who fail to understand how the Senate has worked for more than two centuries. We need to get back to that sense of civility once again ... Even though we have had very strong disagreements, I never once in my life in this chamber ever questioned the patriotic intentions of any member ... the idea you challenge another's patriotism, honesty, their integrity, does a great disservice to this institution, in my view."

He later added, "Again, I regret sometimes the newer members who fail to understand the importance of maintaining that which our Founders envisioned when they created this institution."

Yes, Sen. Dodd, the same Founders who were so angry over their treatment by the crown that they started a violent revolution were certainly much more concerned about manners. Tarring and feathering was simply an elaborate social ritual!

Sen. Dodd is upset about this, and rightfully so. It seems that Sen. Al Franken has this upsetting habit of demanding information from Republicans, and even mocking them when they evade him. One of them apparently went whining to Sen. Dodd and asked him to chastise the horrid Franken.

In case you didn't know, rudeness about political ideology that destroyed this country is on a par - nay, far exceeds the misdeeds of those questioned.

Would that we sought a more genteel way to show our displeasure:

Despite the current constitutional crisis, despite the abandonment of every principle that truly made us the land of the free, the Beltway contingent still believes the problem is merely one of etiquette.

But really, who am I to argue? Maybe they have something here. I’m partial to something I once read in a Regency novel (Jane Austen, I believe). When a societal outcast whose behavior was quite beyond the pale was presumptuous enough to present his hand to you in public, the proper response was to extend to him or her only your pinky.

Get it? You’re such a lowlife, you’re not even deserving of a handshake! I spit on your vileness – in the most polite possible way! I fling my pinky at the likes of you!

The more I think about it, the more convinced I am that this just might work. Think about it: You’re at a Georgetown cocktail party, and Alberto Gonzales is making small talk by the shrimp bowl. “Your name?” he says, extending his hand.

This is the man who’s decimated the Bill of Rights, mind you. What to do? Do you rip off your shirt, revealing a Code Pink T-shirt and embarrassing the rest of the guests with your sheer crassness – or do you extend your pinky? (Oh, I think you already know the answer.)

Say you’re at a speakers panel somewhere and someone invited Donald Rumsfeld. You’re in the receiving line afterward and you’re getting a little weirded out, yes? Well, you have a few options here. Think it through: If you get into a loud shouting match over the seemingly pointless deaths of soldiers and civilians in Iraq, or threw a vial of pig’s blood on his French handmade shirt, what real impact will you have? (Not to mention, it’s terribly déclassé.) Rummy will just tune you out and everyone else will pretend they didn’t hear you.

Ah, but if you extend your pinky, you’ve said it all – in the most genteel way possible.

Yes, while we may eventually live in a nation of radically reduced liberties, a broken economy and a state of perpetual war, we will have the satisfaction of knowing when the going got rough, we didn’t descend to their level.

We did the right thing. We extended our pinkies, thus earning the thanks of a grateful Village.

Or if that doesn't appeal to you, Sen. Dodd, you could always tell your lobbyist friends to go screw them themselves and vote on behalf of the taxpayers... just kidding!

I think it's pretty obvious that we need to change the procedural rules in the Senate, and hopefully get around obstructionist tactics while still allowing honest debate and compromise. We can't have a system where senators from sparsely-populated states maintain such disproportionate power (and that's not even getting into the reality of a Congress corrupted by K Street):

WASHINGTON - Senate Banking Committee chairman Christopher Dodd, who one month ago proposed an overhaul of financial regulations that was hailed by many consumer activists, has all but jettisoned that proposal following Republican objections and has initiated talks for a new approach designed to satisfy some of his fiercest GOP critics.

Dodd’s strategy has raised concerns among consumer activists who were counting on him to come up with a tougher bill than the one recently passed by the House, and now worry that the entire measure will be weakened.

But the Connecticut Democrat, in an interview in which he laid out his strategy, said it would be too risky to launch another legislative effort that might repeat the Senate’s experience with in the health care debate, in which single senators have forced major rewrites or threaten to defeat the measure.

Dodd’s new approach began last week when he paired four Republicans and four Democrats on the Banking Committee to work together to come up with suggestions on reshaping the legislation. The process has not produced any details and is expected to continue through January, but participants have said they are hopeful of brokering a compromise bill that could get a Senate vote next year.

Asked what has become of his initial proposal, Dodd replied: “I laid down a bill that is as much a reflection of where I am on this as to plant a flag. I did what I wanted to do. I provoked people.’’

The strategy contrasts with the method employed by his legislative counterpart, House Financial Services chairman Barney Frank, who oversaw passage of a bill that would transform the regulatory landscape for banks and many businesses - while failing to gain a single Republican vote. Unlike in the House, where bills can pass by a single vote, Dodd needs 60 of 100 senators to avoid a filibuster.