Why the CFPB Is A Critical Step, In One Delicious Article

This piece, entitled “Republicans: CFPB’s funding ‘recipe for disaster’,” from CBS’ MarketWatch is notable for a number of reasons, all of them having to do with demonstrating, vividly, why the current Dodd-Frank construction of the CFPB’s funding and accountability structure is so critical to its mission: helping homeowners and consumers of other financial products.

Start with the title: Republicans making dire-sounding warnings that a government agency is a “recipe for disaster.” It’s not as if we haven’t heard that song and dance before from the GOP. But usually, it’s a more general complaint against the evils of “big government” (read: “ANY government”), full stop. However, that’s not what the GOP’s worried about here. As the rest of the article demonstrates, along with several choice quotes from a few highly-placed Republicans in Washington, what the GOP means this time when they say “recipe for disaster” is: “we don’t have any authority over it (the CFPB), which means we can’t cripple it, and we’re cranky about that.”

As anyone who’s been following the tortuous road the CFPB has taken, from conception and implementation by Elizabeth Warren up to today already knows, the CFPB was defined in the Dodd-Frank bill specifically to have a funding structure that was outside of the traditional congressional appropriations process. There was a VERY good reason for that, namely: one of the ways congress (especially this obstructionist GOP congress of the past four years or so) can kill a thing they don’t like is financially. The way it’s supposed to work, of course, is: you get enough members of your caucus to vote for something, it passes. If you can’t, it doesn’t. But with the GOP in full rout and in the minority in both houses of congress during the first two years of the Obama administration (and the preceding two years as well, to a lesser degree), they’ve had to turn increasingly to parliamentary parlor-tricks like the filibuster in order to force their will-of-the-minority upon the rest of congress and the American people.

One of these tactics/tricks congress has at its disposal is the power of the purse, as it’s called. Even if a given party or faction in congress lacks the votes to stop something which they truly oppose from passing due to its popularity with the majority and/or the American people, a committed minority can often thwart the will of the majority by jamming up that initiative’s funding later. Congress has the power to tax and spend, and even if a majority passes a bill to do this or that, funds must be appropriated to pay for it, usually separately. And without money to execute a mandate, of course, it matters little what the law permits or authorizes.

Since 2006, when the GOP entered the minority in both houses of congress – and especially since 2008 when Barack Obama was elected President – congressional Republicans have used this sneaky, backdoor-veto repeatedly. In fact, they’ve either used or tried to use it virtually everywhere they could, on any item they did not like, from funding for high-speed rail to medical aid to 9/11 first responders to using TARP funds to extend unemployment insurance to their old standby, defunding Big Bird. Sometimes, they’re not successful, many times – especially when all it requires to work is defeating a funding measure, rather than having to pass a measure (which requires more votes) – they’ve been quite successful indeed.

All of which is why the Dodd-Frank legislation very carefully specified the CFPB as an entity within – and, crucially, funded through – the Federal Reserve, which is one of the few places into which congress is prohibited by law from extending it’s financial tentacles. To be clear, in general, it’s good that congress is the place in which the power of the purse resides. If it resided in the executive, the balance of power would shift too heavily in that direction. But with a rogue GOP in congress which is increasingly about proving its points and getting its way at all costs, and about the technical letter rather than the spirit of the law, many of the assumptions upon which the regular rules are based are simply no longer operable.

I know, that sounds like it could be the lead-in sentence to all sorts of horrible authoritarian suggestions, or worse. And it’s true: down that road lies totalitarianism, fascism, and other horrors of the recent past. So I don’t say these things lightly. It’s critical to push back against the ubiquitous GOP attempts at deck-stacking in ways which still safeguard the essential balance of power and respect for tripartite rule inherent in our system, no question about it. But one of those very careful ways is exactly what was employed quite deliberately in the creation of the CFPB as written in Dodd-Frank. Putting the funding for the CFPB within another normal channel – the Fed – but outside the reach of congressional meddling ensures its autonomy and ability to function without having to either worry whether it will be de-funded, or make political compromises (with a GOP who are on record repeatedly stating they wished it never existed at all) in order to remain in existence. A CFPB subject to the funding whims of a GOP-controlled congress is a defanged and ineffective CFPB which becomes little more than another example for Republicans to use of ineffective government programs. It’s the modern GOP way, in fact: break, hobble or otherwise render ineffective as much government as you can, then complain that government doesn’t work so we should abolish or privatize as much of it as possible.

That’s why the comments in this MarketWatch piece are so hilarious, if you know the back-story:

“We have a rogue director in charge of a runaway budget for an agency whose mission is still unclear. This is a recipe for disaster that will only hurt our economy,” said Rep. Francisco Canseco, a Republican from Texas, at a hearing of the House Financial Services Committee.

Have you SEEN Richard Cordray? Or heard him speak? Does he either sound or look like a “rogue” to you? That’s because he isn’t. He’s a dedicated public servant who was Elizabeth Warren’s right hand man during the setup of the CFPB, and a defender of Ohio’s consumers and citizens prior to that. His record is lengthy and public and shows no trace whatsoever of any symptoms of being a dangerous, power-hungry “rogue.” Quite the opposite: the man’s record shows him to have been a leading scholar at Oxford University, the editor of Law Review at University of Chicago where he attended law school, and then a vigorous defender of average citizen’s rights against trampling by large financial institutions as Attorney General of Ohio. Representative Canseco knows this, so rather than impugn the man’s credentials – which would be nigh on to impossible (and which, in turn, would be why he would sail through any up-or-down confirmation vote) – Canseco simply makes vague, ill-defined fear-mongering statements about “runaway government.” And it leaves Canseco sounding like a near-paranoid, worrying about some ill-defined “rogue” that doesn’t exist in reality.

But my favorite quote in the MarketWatch piece? The one near the end, from Alabama Republican Spencer Bachus, current chair of the Financial Services committee (who famously said just before he began his chairmanship that the role of Washington should be “to serve the banks”):

Cordray and the panel’s chairman, Rep. Spencer Bachus, clashed over whether the bureau could spend frivolously. “The truth is [Cordray] could tell us the CFPB spent $100 million on paper clips last year and there is nothing Congress could do about it. Nothing,” the Alabama congressman said.

Paper clips. No, really. That’s what he said. $100 million on paper clips.

Just step back a moment, take a deep breath, and ponder the lunacy of the public spectacle of a serving U.S. Representative, one of only a handful of the supposedly wisest old heads in Washington and the rest of the country, a member of a body which is empowered to declare war and control the country’s finances, actually having no better or less-risible argument than worrying that Richard Cordray might spend $100 million on paper clips. That’s what they’re reduced to here, folks: trying to fear-monger about the waste of taxpayer funds…on paper clips.

To be more fair to Bachus than he probably deserves, he was probably being hyperbolic, intentionally choosing a ridiculous example to demonstrate his larger point that he and the rest of congress couldn’t do  anything about it if Cordray DOES misuse taxpayer funds. And in this, he’s quite correct; congress would be mostly powerless. But that doesn’t mean there’s NO constraints on Cordray and the CFPB, just – and this is the crucial part for understanding the Republicans’ pique on this issue – no congressional constraints. And that’s what really chaps Bachus, Canseco and the rest of the congressional GOP.

The real reason Bachus and Canseco and others are worried, of course, isn’t that they truly believe Cordray will be buying paper clips by the oil-tanker-load, or even that he’ll waste taxpayer money in more common, less spectacular ways. It’s because one of the main tools the GOP would expect to be able to deploy for tree-spiking pro-citizen, pro-consumer legislation which will massively benefit the average person but will do so by reining in some of the worst excesses and abuses of financial institutions, is not available to them in this particular case, due to the prescient way Dodd-Frank was authored. I imagine Barney Frank chuckled rather loudly if he read this MarketWatch article or was at the hearing in question.

Yes, it’s quite sad – and maddening – that the truth of things in America, 2012 is that today’s GOP would rather “serve the banks” than their own constituents (the real people, not the corporations) but that’s been the reality of things for quite several years now. They are intent on blocking progress at every turn, returning us to the days of gas guzzlers, incandescent light bulbs, no contraception or abortion, and – they fondly imagine – the days of unquestioned American supremacy. For once, the spectacle of watching some of the GOP’s worst offenders wax apoplectic about their impotence in this case is some very high-grade schadenfreude, for many reasons.

What? Worst offenders? Why yes, I do mean that literally, as a matter of fact: as the MarketWatch article points out immediately following his quote, Spencer Bachus is currently under investigation for having cashed-in on insider knowledge in the middle of the Lehman collapse and ensuing financial meltdown.

And THESE are the guys who wish us to take their concern for “rogue actors” wasting taxpayer dollars on late-night paper clip binges seriously? Please…

Politics 101, Economics Edition

(warning: lengthy, Socratic-ish discourse ahead):

Damn It Feels Good To Be A Banker

Over at POLITICO, we learn that Wall Street intends to turn the full wrath of it’s newly-increased, post-Citizens United and SuperPAC strength, against President Obama this year. Expect a veritable blizzard of deceptive, negative advertising.

The usual suspects will, no doubt, tout this as proof positive that claims of Obama being friendly to Wall Street are – and always were – simply wrong at best, and more likely the malicious fabrications of angry liberals (yeah, I know, but this is what these folks really think) who, in Robert Gibbs’ notorious phrasing, would’ve preferred a President Kucinich (but wouldn’t even have been satisfied with that). But the reality is far simpler.

It isn’t that the POLITICO piece is wrong – because I doubt it is. The Center for Responsive Politics does excellent work, and there’s no reason nor evidence to suspect they’re wrong when they say that Wall Street’s number one priority this election cycle will be to defeat President Obama (followed closely by various vulnerable Democratic legislators the bankers perceive as openly hostile to their interests). The fact, outlined in the article, that “Obama has raised just $5.1 million from the finance, insurance and real estate sectors so far this cycle compared with $12.4 million for Mitt Romney’s campaign” ought to be enough to convince anyone where Wall Street’s sympathies lie this time out.

Instead, what’s incorrect is the facile assumption that because Wall Street is backing Mitt Romney over Obama, it must be due to the fact that Obama has been in practice some kind of crusading Occupy Wall Street 99%er. Even a casual glance at the record of evidence amassed over the past three-plus years disproves this notion easily. What such a glance reveals is an administration at least as concerned with reducing the deficit immediately as it is in putting Americans back to work or reducing their suffering on the mortgage/housing bubble front. Such a glance shows an administration whose actions – if not always their words – reveals their belief that a healthy finance sector equals (or at least will lead to) an equally healthy America for the rest of us. Such a glance shows an administration all-too-willing to hold-over Bush-era appointees in key financial positions, and to refuse to use the power of the executive to appoint desperately needed, pro-consumer/citizen heads of its own to departments and other key positions (DeMarco, at FHFA, is perhaps the most-visible of these).

Greece Today

Greek MPs pass austerity measures.

Oddly, at the same time, Greek people weigh in on the idea of years of crushing recession to pay for politicians’ profligacy & central bankers’ unwillingness to make investors actually lose any money:

Cause, meet effect. Dammit.

Filet of David Frum

Welp, Buffalo Beast has the 2011 edition of their annual list of the 50 Most Loathsome Americans up (actually, it’s been a couple of days now). As usual, it’s hilariously schadenfreude-filled, even if most of it is merely speculative or wishful. For anyone who hasn’t read it in years past, it’s an arbitrary listing of the 50 top offenders in American culture, politics, society, etc, as chosen by Ian Murphy at BB. Murphy presents a case-study on each one, with a commented enumeration of the person’s “crimes” (often metaphorical but occasionally literal, as in the case of this year’s #35, Casey Anthony), culminating in the “smoking gun” – usually, a piece of truly stupid and/or venal dialogue the condemned has been quoted as saying in public in the last year (though sometimes, especially pungent quotes from previous years are pressed into service). At the end is the “sentence,” the what-would-happen-in-a-perfect-world summary judgment.

This year’s list is a typical, only-partially-distorted, hilariously snarky take on some of the most loathsome figures to blot the American cultural, political and intellectual landscape. From caricaturing Ron Paul as Gollum (# 23) to the devastating sentence rendered upon Christopher Hitchens (“remembered accurately”), the whole thing is worth your time from start to finish (unless you’re the type of hypocritical prude who thinks the nasty public rantings of Newt Gingrich at the GOP debates is just “discussing ideas” but who finds the public skewering of Newt Gingrich to be just “needlessly mean-spirited,” in which case, you should definitely stay away).

But my favorite this year was an unexpected one, my old bete noire David Frum. It’s worth excerpting in its devastating entirety:

Crimes: As Bush’s speechwriter he gave us the “Axis of Evil,” and now he wants us to believe that, in comparison to today’s insane Tea Party set, he represents an endangered levelheadedness of Republicans past. No, we’re sorry. Remorseful as you may feel for lying the country into a tragically pointless war, you don’t get to capitalize by pitting your purported moderate pragmatism against today’s partisan extremism which you helped catalyze with fear, deceit, and pure political cynicism — and be taken seriously! — without first penning an apologetic tome in your own blood, tattooing said tome across every inch of your naked flesh, and being forced to read it with your too-close-together-eyes every goddamn day for the rest of your scarred and dismal existence. A very sensible demand, considering.

Smoking Gun: While some were quick to blame lax gun laws, Sarah Palin, or mental illness for Jared Loughner’s Arizona death-spree, Frum had the temerity to speculate that the real cause was pot.

Sentence: Found hanging in his closet, pants around his ankles, Abu Ghraib torture pic still glued to his limp semen-coated hand.

Ow. That’s gotta hurt, David.

To be (far more) fair to Frum (than he deserves), I’ll take accurate criticism of the insanity of much of what passes for ordinary discourse and political ideas on the “respectable” right these days – not even the fringe – wherever I find it, including on the pages of Frum’s blog. Frum is quite correct when he points out just how insane and hateful much of it has gotten; how far right the Republican party has gone. But Frum is far from the only person observing such things these days (it’s pretty hard to miss. Bill Maher famously quipped: ‘the Democrats moved right, and the Republicans moved into a mental institution”) It isn’t that I don’t want to hear such words out of Frum in particular or anyone else. It’s not even that I don’t think there’s value in those words coming specifically out of the mouth of a former “fellow traveler” of many of these same insane-righties Frum now tut-tuts. Rather, as the Buffalo Beast piece lays bare in the way that sometimes nothing but sneering invective can, it’s that it’s creepy to hear such charges – accurate though they may be – out of a man who enthusiastically participated in what can now be seen in retrospect as the Bush administration’s inaugural kickoff of the mainstreaming of full-bore right-wing nuttery in political ideas.

If Frum had written any sort of book (or even just a short article) on the order of “confessions of a former….” in which he mostly admitted his own role in creating the current mess, recanted it, and apologized for his part in damaging the dialogue, it’d be a different story. But Frum has not – and will not – do that, because theres more than a small dollop of narcissism about Frum, along with the stubborn conviction that he is somehow better than the rest and the belief that the current mess really ISN’T due to his actions or words in any way. Thus, Frum’s nevertheless-correct pronouncements of extremism upon Gingrich and Palin and other far-right figures of today read more like a high-powered legal defendant who’s trying to rehabilitate his image without admitting fault after plea bargaining or escaping prosecution, than an apology from a genuinely remorseful figure – or even an attempt at making things better from someone who’s aware of and admits his own role.