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MIKE TIPPING: GOP senators want to strip powers from fiscal oversight agency

Mike Tipping

In the months directly after the financial crisis that crashed economies all over the world, the image and power of Wall Street was at a low ebb in Washington.

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We're not talking as low as the tides in the Bay of Fundy, though. The ebbing of the influence of Wall Street on Congress took them only from all-powerful to incredibly-but-not-quite-all-powerful. Still, it was enough for some financial regulatory legislation to slip through.

Financial industry lobbyists stripped many of the most effective parts of the financial reform package, but one very important provision made it through.

The law established a new Consumer Financial Protection Bureau, an institution meant to protect Americans from the worst kinds of financial abuses and to finally make the prices and risks of things such as credit cards and mortgages clear, transparent and fair.

The bureau was the brainchild of Elizabeth Warren, a financial law expert and Harvard professor who chaired the Congressional Oversight Panel created to investigate the bailout of the big banks and has often led a lonely fight to hold the financial industry accountable for abuses and excess.

While Warren is widely recognized as a pre-eminent expert in financial regulation, much of her work has been focused on real people and what financial decisions mean to them.

She wrote the bestselling book "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke," has maintained a blog about bankruptcy and financial issues, and speaks and acts with a populist attitude that makes it obvious she was raised in Oklahoma.

"Credit cards are like snakes: Handle 'em long enough and one will bite you," Warren is quoted in a profile in Bloomberg. "You have to remember what are incomes to banks are outgoes to families."

There's now a debate in Washington over Warren and the Consumer Financial Protection Bureau.

Wall Street doesn't want her to head the new regulatory agency.

They're fearful of actually giving a regulatory badge to someone that a Time magazine cover story called a "sheriff of Wall Street."

The banks say they want someone with more ties to the current financial industry to hold the post and claim that, despite her deep academic and practical background in financial regulation, Warren doesn't have enough experience on Wall Street itself.

This argument seems a thin veil for the real reason they oppose her: the effect pro-consumer regulatory practices would have for their bottom lines. As an editorial in The New York Times put it, "The banks don't oppose Ms. Warren because she doesn't get it. They oppose her because she does."

While U.S. Sens. Olympia Snowe and Susan Collins of Maine voted in favor of the financial regulatory package, they've now taken a position against Warren and, in fact, against any nominee to head the CFPB.

In a letter signed by 44 of 47 Senate Republicans, they joined their colleagues in threatening to filibuster any nominee to head the bureau, regardless of the person's qualifications, unless the regulatory agency itself is significantly weakened.

They want to remove much of the decision-making authority of the bureau's director and give other regulators, many of which have become troublingly close to the financial industry they're supposed to regulate, the ability to block CFPB rules.

Sen. Scott Brown of Massachusetts, who joined Snowe and Collins in originally supporting financial reform, declined to sign the letter.

U.S. Rep. Chellie Pingree, D-1st District, has lined up on the other side of the issue. This week, she joined Democratic colleagues in the House in signing a letter urging President Barack Obama to fight back against the filibuster threat and against the influence of Wall Street by nominating Warren through a recess appointment.

"Since Republican senators have said that no one is acceptable unless the law is weakened, we would urge you to nominate Professor Warren as the CFPB's first director anyway. If Republicans in the Senate indeed refuse to consider her, we request that you use your constitutional authority to make her a recess appointment. We can think of no better person to be the first director of this incredibly important consumer financial protection regulator," reads the letter.

The debate comes at a critical time. This may be the last chance we have to reign in Wall Street before it goes back to the practices that caused the crash.

As Warren recently put it, "This is America's middle class. We've hacked at it and chipped at it and pulled on it for 30 years now, and now there's no more to do. Either we fix this going forward, or the game really is over."

Mike Tipping is a political junkie. He writes the Tipping Point blog on Maine politics at DownEast.com, his own blog at MainePolitics.net and works for the Maine People's Alliance and the Maine People's Resource Center. He's @miketipping on Twitter. Email to writebacktomike@gmail.com.