Watchdogs And Lapdogs On Financial Reform

Isaiah J. Poole

There was a major victory for accountability this week in the financial reform fight, but there was also a demonstration that when it comes to protecting the profits of bankers at the expense of ordinary people, no institution does it better than the Party of No.

First the good news—and it is huge. Rep. Alan Grayson, D-Fla., working with Rep. Ron Paul, R-Texas, managed to get an “audit the Fed” amendment into financial regulation legislation (HR 3996) that is moving through the House Financial Services Committee.

That amendment will for the first time expose the deals that the Federal Reserve has been cutting with the financial services industry and will detail what taxpayers are on the hook for and why. It is a commonsense amendment that has united progressives and conservatives, especially in light of the trillions of taxpayer dollars the Fed has put at potential risk to bail out Wall Street, without accountability to anyone. Grayson made the case for the legislation in a “Dear Colleague” letter in May.

The Fed audit provision was approved by a committee vote of 43-26. In a statement after the vote, Grayson said:

The Federal Reserve has conducted secret bailouts that range in the hundreds of billions of dollars. Congress never voted on them, and the President never approved them. This cannot go on any longer. It’s bad enough that we have bailouts at all. But it is really bad if they are secret, with the Fed transferring money to banks without the public knowing about it.

Bill Scher’s Progressive Breakfast today has links to more details on this victory, and The Huffington Post’s Ryan Grim has a blow-by-blow account of the drama leading up to the committee vote.

The vote on the final legislation has been delayed until December 1. As Scher’s Progressive Breakfast notes, members of the Congressional Black Caucus have withheld their support for the bill out of concern that the Obama administration is not addressing aggressively enough the devastation being wrought on African-American communities by the financial crisis.

This came a day after conservatives in the Senate continued their lapdog obstructionist behavior, in a way that will cost working families millions of dollars as they head into the holiday season.

Sen. Thad Cochran, R-Miss., led a Republican filibuster on Wednesday against legislation offered by Sen. Christopher Dodd, D-Conn., that would freeze credit card rates in advance of legislation that would regulate the credit card industry.

The bill is necessary, as Firedoglake’s David Dayen notes, to halt the headlong rush by the industry to increase interest rates and fees they are imposing on their customers to get ahead of new rules Congress approved this year but much of which, at the behest of the banking industry, won’t go into effect until February 2010.

Dodd said on the Senate floor:

Consumers obviously have a responsibility to spend within our means and to pay what we owe. We bear that responsibility. But the credit card industry as well has a responsibility to deal with their customers honorably. There is nothing honorable about what’s happened with these significant rate increases and fees. Most importantly, they don’t have a right to rip off American families, especially when the Congress has already gone on record opposing the very actions they’re engaging in.

But The Party of No disagrees. There is something honorable about gouging consumers before the law kicks in that says you can’t. Banks do have a right to rip off American families. That is what Thad Cochran and his Republican colleagues are standing up for.

It’s another sordid chapter in the record-breaking obstructionism of Senate conservatives. Not content to cripple Congress and overturn the majority demand for change, they now want to steal Christmas. Shame.

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