Getting a Consumer Financial Protection Agency passed is going to be hard enough, given how the still-extremely-powerful banking industry has vowed to fight it to the death. Now, Reuters reports that other regulators are trying to smother the agency in the cradle.
One of the only things that can rival the ferocity of a banker protecting his lucre is a bureaucrat protecting his turf. So look out.
Reuters reports that the Federal Reserve is claiming it’s done a super job protecting consumers over the last couple of years—never mind those predatory lenders they let run rampant during the bubble. And:
Other bank regulators such as the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency — which have examination and enforcement but no rule-writing authority — are already making their case to lawmakers behind closed doors that regulating a bank and regulating the products it markets to consumers should go hand in hand.
That paragraph is followed with an understatement:
Yet regulators have to be careful to avoid looking as though they are allying themselves with the banks they regulate.
Like they have for years.
Reuters does a good job of laying out the issues and how regulators are trying to cover their rears, but also how it’s unlikely that’s going to be enough for Congress:
But it may be difficult to persuade lawmakers to give it another chance, particularly because the Obama administration is also pushing to give the Fed more powers as a new “systemic risk” regulator tasked with ensuring banks are not taking risks that could threaten the entire financial system.
And even quotes Elizabeth Warren while it’s at it:
“If the current federal agencies had used the power that was given to them, then we wouldn’t be in this financial crisis,” said Elizabeth Warren, who chairs a congressionally appointed panel that oversees the Treasury Department’s bailout efforts.
Nice work by Reuters to shine a light on another kind of status quo lobbying.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.