A Fighting Chance (57 page)

written fairly and enforced vigorously:
The original name proposed by the White House for the agency was the “Consumer Financial Protection Agency,” and its mission would be “protecting consumers in the financial products and services markets.” The administration intended for the new CFPA to be a stand-alone agency with “an independent seat at the table in our financial regulatory system” and for the CFPA to end the practice of a bank’s being “able to choose its supervisor based on any consideration of real or perceived differences in agencies’ approaches to consumer protection.” “Financial Regulatory Reform; A New Foundation,” 55–57.

two hundred groups would join the cause:
AFR is a nonprofit coalition that today includes more than 250 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups dedicated to laying the foundation for a strong, stable, and ethical financial system. I am deeply grateful to AFR and its member organizations for the absolutely critical role they played in the fight for the consumer agency. Heather Booth put the group together, with Lisa Donner as her deputy, and, after Dodd–Frank was adopted, Lisa became the full-time director. Two of the deans of the consumer movement who helped AFR and put their own considerable muscle behind adoption of the consumer agency were Travis Plunkett at Consumer Federation of America and Ed Mierzwinski of PIRG. They not only brought considerable skill and experience to the fight, they also inspired others to venture into the area of consumer finance. For more information, see
http://ourfinancialsecurity.org
.

While it is impossible to list all of the groups that played a role, I want to particularly acknowledge the contributions in this fight of AARP, AFL-CIO, American Family Voices, AFSCME, American Sustainable Business Council, Americans United for Change, Business for Shared Prosperity, Campaign for America’s Future, Center for Media and Democracy, Center for Responsible Lending, Consumer Action, Consumer Federation of America, Consumers Union, Corporation for Enterprise Development, Demos, Greenlining Institute, Hastings Group, Lawyer’s Committee for Civil Rights Under Law, The Leadership Conference on Civil and Human Rights,
MoveOn.org
, NAACP and the NAACP Legal Defense Fund, National Association of Consumer Advocates, National Community Reinvestment Coalition, National Consumer Law Center, National Consumers League, National Council of La Raza, National Fair Housing Alliance, National People’s Action, National Urban League, PICO National Network, Public Citizen, Public Interest Research Group (PIRG), Roosevelt Institute, SEIU, Progressive Change Campaign Committee, USAction, and the other members of AFR that worked so hard.

They worked their hearts out:
For example, the National Consumer Law Center, which was one of the premier consumer advocacy groups, supporting litigation and policy research on a range of issues, including student loans, foreclosures and debt collection, took up the fight. They provided terrific papers and analysis of the need for a consumer agency.

and Dan said yes:
The Roosevelt Institute jumped into the financial reform debates with amazing speed and with some really smart people. The Institute quickly became a hub of activity, a place to find first-rate research or to meet with other experts. Under the leadership of Andrew Rich, the Institute was one of the key partners in sensible financial reform.

had worked for a member of Congress:
It is common practice for former Members of Congress, congressional staffers, and other government officials to leave government service for lobbying firms. As of 2010, the six biggest banks had hired 243 lobbyists who once worked in the federal government, including 33 who had worked as chiefs of staff for members of Congress and 54 who had worked as staffers for the Senate or House banking committees. See Kevin Connor, “Big Bank Takeover: How Too-Big-to-Fail’s Army of Lobbyists Has Captured Washington,” Institute for America’s Future (2010),
http://ourfuture.org/files/documents/big-bank-takeover-final.pdf
.

Another analysis by the
Huffington Post
showed that the House Financial Services Committee has an active revolving door: Of the 243 staff members who worked on the Committee between 2000 and 2010, about half of those who left had registered as lobbyists. Most of those registered as lobbyists for the financial industry. Ryan Grim and Arthur Delaney, “The Cash Committee: How Wall Street Wins on the Hill,”
Huffington Post
, March 18, 2010.

they could to stand up for consumers
: Many consumer groups turned to the Center for Responsible Lending for research. Under the leadership of Martin Eakes, CRL had developed some of the best research anywhere on the impact of various financial scams on American families. CRL also provided critical data early on about the mortgage foreclosure crisis. Without its careful and detailed studies, much of the work to get the consumer agency passed into law would have been harder.

gazillion other issues to boot:
For example, Jim Guest, the longtime president and CEO of Consumers Union, got into the battle. CU had a huge number of issues on its plate, from assessing the reliability of cars to evaluating the effectiveness of stain removers. But Jim jumped in, inviting me to discuss the consumer agency with thousands of e-activists by telephone conference call. Those e-activists then wrote e-mails and letters, called members of Congress, and otherwise advocated for reforms. They were smart and tough as they pressed for adoption of the CFPB, and they gave new energy to our efforts.

Similarly, Public Citizen was working on trade policy, minimum wage issues, and money in politics, and still helped to get the consumer agency passed. All their work was critically important, and they covered such a wide range of topics only by working long hours on a tight budget.

drive to kill any meaningful financial reform:
According to the Center for Responsive Politics, the banking and finance industry spent, in the aggregate, more than $523 million on campaign contributions and lobbying, or $1.4 million a day, during the fight against financial reform. “As Senate Begins Financial Reform Debate, Industry Spends Tens of Millions to Influence Debate,” Center for Responsive Politics Press Release, March 22, 2010. The number was found by aggregating the campaign contributions and lobbying expenditures made by accounting firms, commercial banks, credit unions, finance and credit companies, insurance companies, real estate firms, savings and loans, and securities and investment firms. One member of the House Financial Services Committee, Maxine Waters, lamented how powerful the lobbying had been: “I understand they have almost hired a lobbyist for each one of us.… I’m more concerned that there are members of Congress who are beginning to take on the arguments of the financial services industry about why a consumer financial protection agency is not necessary.” Ryan Grim and Arthur Delaney, “The Cash Committee.”

reelection campaigns of influential members of Congress:
In 2009, of the ten Representatives most well funded by the finance and banking industry, five were members of the House Financial Services Committee.
http://www.opensecrets.org/news/2009/11/finance-and-credit-companies-l.html
. Because of the high campaign contributions to its members, the Financial Services Committee is known as a valuable committee assignment for vulnerable members of either party who need to raise lots of money for reelection. It’s a quality that has helped earn the bottom two rows of the committee hearing room—where all the most junior members sit—the reputation of being “the place where reform goes to die.” Between 2009 and 2010, the eleven freshmen on the committee raised an average $1.09 million for their 2010 reelection campaigns. The House-wide average was less than half of that number. Ryan Grim and Arthur Delaney, “The Cash Committee.”

“
Our goal will be to kill it
”: Scott Talbott, then a top lobbyist for the Financial Services Roundtable, was quoted as saying: “Our goal will be to kill [the Consumer Financial Protection Agency], or make it the least-worst way to do the wrong thing.” Cheyenne Hopkins, “Banking Industry Is Underdog in Fight over New Agency,”
American Banker,
July 1, 2009.

was “positively Orwellian”:
Hensarling’s op-ed first appeared in the
Washington Times
in July 2009. He argued that the agency would “have the power to strip from consumers their freedom of choice and restrict their credit opportunities.” He also argued that it would harm consumers by “stifling innovation” and would create “less competitive markets.” He concludes that “the CFPA says to the American people, ‘You are simply too ignorant or too dumb to be trusted with financial products.’” He advocates an alternative Republican plan to focus on more disclosures. Jeb Hensarling, “Punishing Consumers to Protect Them,”
Washington Times
, July 22, 2009.

eye on the credit-reporting companies:
For example, the National Consumer Law Center (NCLC) issued a 2009 overview of studies and surveys on the extent and impact of errors on credit reports. Studies from PIRG and Consumers Union estimated that 25 percent of credit reports had errors serious enough to cause a denial of credit. Over half of the participants in a Federal Trade Commission study found an error in their credit reports, and a quarter of those participants had a materially harmful error. The types of errors found across studies included mixed files (where one consumer was mistaken for another, and vice versa), identity theft, incorrect payment history, ownership dispute, and “re-aging” of debt (where debt that gets charged off after a certain amount of time is added back on by misrepresenting the date the debt was incurred). Consumers’ lengthy written complaints were reduced to one of a handful of two or three letter codes and rarely investigated. See Chi Chi Wu, “Automated Injustice: How a Mechanized Dispute System Frustrates Consumers Seeking to Fix Errors in Their Credit Reports,” National Consumer Law Center, January 2009,
http://www.nclc.org/images/pdf/pr-reports/report-automated_injustice.pdf
. See also “Credit Score Accuracy and Implications for Consumers,” Consumer Federation of America, December 17, 2002,
http://www.consumerfed.org/pdfs/121702CFA_NCRA_Credit_Score_Report_Final.pdf
.

Progressive bloggers joined the fight:
Many bloggers criticized Senator Dodd for his signals to exclude the agency, and they started a campaign to push him to keep the agency in the bill. One blog referenced a lobbyist who said that Dodd was paying back the bankers for keeping him in office for so long. It also depicted a cartoon of Dodd’s “Dance Card,” listing individuals who would benefit from the agency—“Overworked Olivia” and “Bankrupt Betty.” At the end of the list was “Wall Street Fat Cats,” crossed out. Mary Bottari, “Senator Dodd’s Dilemma: Who to Take the Ball?,” Center for Media and Democracy’s PR Watch, January 19, 2010. The dance card was sent around as a petition, with the language “Senator Dodd, Tell Wall Street You Have a New Dance Partner!,”
banksterusa.org
,
http://salsa.democracyinaction.org/o/632/p/dia/action//files/01/33/f0133/public/?action_KEY=2040
.

Mike Lux played a critical role in introducing me to bloggers and activists and advising me on how to organize people through new media. More generally, he rallied support for the consumer agency from a broad cross-section of people and made a real difference. He understood the importance of this fight early on, and he has also stood strong for the consumer agency and financial reform ever since.

a guy named Rich Cordray:
Attorneys General Tom Miller (IA), Lisa Madigan (IL), Richard Blumenthal (CT), and Richard Cordray (OH) spoke out in favor of the agency. Cordray emphasized that “until we establish a Consumer Financial Protection Agency, we will continue to have a regulatory black hole when it comes to many of the deceptive practices and products.” Austin Kilgore, “Democrat Attorneys General Push for Consumer Financial Protection Agency,”
Housingwire.com
, February 9, 2010. Martha Coakley, attorney general for Massachusetts, and I wrote an op-ed in the
New Republic
, strongly advocating for a new agency. She was always ready to speak up on behalf of the agency. Martha Coakley and Elizabeth Warren, “The Right Way to Regulate,”
New Republic,
November 18, 2009.

published editorials and op-eds about the agency:
For examples of columns supporting the agency leading up to the Senate Banking Committee’s markup of financial reform, see Barbara Kiviat, “Don’t Kill the Consumer Financial Protection Agency, Part 2,”
Time
, February 19, 2010. See also Michael Grunwald, “The Case for a Consumer Financial Protection Agency,”
Time
, February 17, 2010. See also Ezra Klein, “Don’t Kill the Public Option of Financial Reform,”
Washington Post
, January 15, 2010. See also Paul Krugman, “Financial Reform Endgame,”
New York Times
, February 28, 2010.

water down the agency:
Interview by Chris Matthews with Chris Dodd (March 2, 2010), available at
nbcnews.com
. See also Jim Puzzanghera, “Dodd Moves to Scale Back Consumer Financial Protection Agency Plan,”
Los Angeles Times
, March 2, 2010.