#OWS, Class Warfare and a History Lesson on the Bonus Army of the 1930's

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Rachel Maddow and New York Magazine's Frank Rich did a wonderful job of giving her viewers a little history lesson for those who were not already aware of the struggles, protests and turmoil that Americans experienced in similar times of severe income disparity, a government that was only responsive to the ultra-rich and and uprisings that eerily resemble what we're seeing now with the Occupy Wall Street movement.

Sadly, most Americans are not taught about the protests by the Bonus Army during the Great Depression as Maddow and Rich discussed here, nor are they taught about the history of our labor movement and the violence that was inflicted on them as well, before we finally got some laws in place to keep workers from being abused by their employers and some rights to protect them in the workplace. If there's anything you can say about the success of the Occupy Wall Street movement, I agree with Maddow: It has at least changed the conversation in America about our economic policies and the fact that the poor and what's left of the middle class were pretty well being ignored by our corporate media before these protests started taking root nationwide. I'm grateful to both Maddow and Rich for segments like this that do take the time to educate the public about some of our history that most in the media and in our schools would rather ignore. Here's Rich's article -- The Class War Has Begun. Transcript of Maddow's opening describing some of it below the fold. MADDOW: A few years after the end of World War I, congress passed a law saying that veterans of that war were entitled to a bonus for their service. In 1924, Congress said American veterans of the First World War had earned a bonus of $1,000. But here`s the catch: it could not be paid for about 20 more years. They couldn`t collect it until 1945 or their families could collect it upon their death if that came before 1945. Well, along the way, the country felt into the Great Depression. Americans were starving to death. They were on bread lines. And the veterans who knew that thousand dollars was owed to them by the government decided they would much rather collect that now, please. That money was owed to them. They had earned it and needed it to feed their families now. So, in the spring of 1932, in the middle of the Great Depression, the veterans marched in to Washington because they wanted payment of that bonus they had earned in World War I. They were called the Bonus Army. The Bonus Army set up as an encampment in Washington, D.C., tens of thousands of people in a living political protest. History tells us they kept their instant city clean. They integrated their camp racially which was really quite radical at the time. We know they grew gardens for food. They settled in for as long as it might take to make their point to Congress and then President Herbert Hoover. At least that`s what the Bonus Army hoped. The head of the U.S. Army, General Douglas McArthur, looked out at the peaceful protests of the veterans camping out and saw an embarrassment for his commander in chief. McArthur mustered troops on horseback against the veterans` camp and followed those horses with tanks. The destruction began. (BEGIN VIDEO CLIP) NARRATOR: Then troops began to set fire to their wooden shacks. One reporter wrote, "The blaze was so big it lit the whole sky. A nightmare come to life." The president looked out a window of the White House in the direction of the fire then retired for the night. And the roaring flames, the fantastic Bonus Army that in so disastrously in the shadow of the capitol of the United States of America. (END VIDEO CLIP) MADDOW: Two U.S. veterans were killed that day, but the movement grew. What does not kill you makes you stronger, they say. News of the raid, the first footage of what had happened reached Americans in movie houses, in newsreels that they used to show in theaters before the main feature. As Frank Rich describes in "New York" magazine this week, when Americans saw the newsreels of McArthur`s army destroying the protest camp, Americans applauded the Bonus Army, they cheered for the Bonus Army, they booed General McArthur. Yesterday, these images began to reach Americans. As the police in Oakland, California, breaking up the occupy protests there, "Occupy Oakland." Part of the "Occupy Wall Street" movement is for economic justice. This one in California, the police moved in with batons swinging, they tore down tents and smashed signs. They sent tear gas grenades into the crowd. The cops are also alleged to have fired rubber bullets, something they are denying, despite injuries to protesters that look like they were caused by rubber bullets. And police admits to firing bean bag rounds, though. Frankly, when you look at the footage of this, it rather looked and sounded like a small war. Washington, D.C., 1932, the raid on the Bonus Army. Oakland, California, 2011, the raid on "Occupy Oakland, "Occupy Wall Street" -- two American scenes separated by almost a century. Put the old one in color, throw on some plaid shirts and you almost could not tell them apart. In his story this week in "New York" magazine, Frank Rich tells the story of the Bonus Army and of "Occupy Wall Street." He titles it, quote, "The Class War Has Begun."

Full transcript of her interview with Frank Rich is available here.

MUST READ: CSS press statement regulatory protections preserve jobs.pdf (application/pdf Object)

CSS press statement regulatory protections preserve jobs.pdf (application/pdf Object)


The Coalition for Sensible Safeguards is an alliance of consumer, labor, scientific, research, good government, faith, community, health, environmental, and public interest groups, as well as concerned individuals, joined in the belief that our country’s system of regulatory safeguards provides a stable framework that secures our quality of life and paves the way for a sound economy that benefits us all. For more information about the coalition, see http://www.sensiblesafeguards.org/about_us.

PRESS STATEMENT

‐For Immediate Release‐
Sept. 7, 2011
Contact: Rich Robinson, Public Citizen, (202) 588‐7773 or rrobinson@citizen.org; Brian Gumm, OMB Watch, (202) 683‐4812 or bgumm@ombwatch.org

President, Congress Must Acknowledge Regulatory Protections Preserve Jobs, Strengthen Our
Economy and Nation

A Statement from the Coalition for Sensible Safeguards

(WASHINGTON, D.C.) – On Thursday, President Barack Obama will announce a much‐anticipated jobs plan. Congressional Republicans have already previewed their response: stepped‐up attacks on the standards and safeguards that protect our air, our water, our food, our nation's working families and our economy. They will continue this line of attack despite the fact that deregulation led the country down the road to financial collapse and 8 million lost jobs, as well as a growing body of evidence that public protections can prevent significant health care costs and help provide the much‐needed economic stability that spurs job creation. The president and Congress need to acknowledge deregulation's role in American job losses if we are going to have an honest conversation about job creation and our regulatory system.

A recent survey of business economists – including those who work in the private sector – found that 80 percent believe our regulatory system is good for the economy. Others have pointed out that not only are regulations a necessary foundation for any business, deregulation can actually have a negative effect. When Congress and executive branch agencies rolled back the long‐standing regulatory standards of the Glass‐Steagall Act of 1933, blocked the Commodity Futures Trading Commission (CFTC) from regulating financial derivatives and
refused to enforce the financial rules that were still in place, it facilitated the financial meltdown of 2008 that created the recession and our massive jobs deficit.

As lawmakers work to put Americans back to work, they need to keep in mind that regulatory standards encourage industries to innovate, to shift to creating products for the future and to step into new opportunities. Enforcing and strengthening environmental and safety standards, for example, can also encourage American businesses to become industry leaders in emerging sectors.

Financial safeguards are crucial. They help set the rules of the road, and they can also protect the economy from reckless, irresponsible behavior that has pushed the financial sector to the brink and severely damaged millions of Americans' credit ratings and retirement funds.
It is also important to remember that the benefits of regulations far outweigh their costs. The latest Office of Management and Budget (OMB) report shows that from 2001 through 2010, the benefits of major regulations reviewed substantially exceeded their costs. It put the total annual benefits “between $132 billion and $655 billion, while the estimated annual costs are in the aggregate between $44 billion and $62 billion.” That estimate puts benefits at 2 and 15 times more than the cost.

Gutting standards and competing in a race to the bottom on wages and public protections undermines U.S. business competitiveness for the future. Americans need high‐quality, stable jobs that provide for their families and their futures. Congress and the president must focus on helping to create those jobs while preserving and strengthening the system of safeguards that is good for our health and safety, our economy, our families and our communities.

###

Cheat Sheet on Bank Investigations and the Probes That Have Petered Out

by Marian Wang
ProPublica, May 24, 2011

As we and many others have noted, no top banking executives have been successfully prosecuted in connection with the financial crisis: not for making the bad loans that fed the mortgage machine, not for lying about the quality of the mortgages, and not for foreclosing improperly when homeowners struggled to make loan payments.

But there have been many investigations. Some are still pending, others seem to have fallen by the wayside. Here’s our overview of what the banks have been accused of doing at each stage of the mortgage machine.

Let us know in the comments section if we’ve left off any significant investigations that have died quiet deaths or are still ongoing.

The First Step in the Machine: Risky Lending and Underwriting

Regulatory action against the major lenders has been relatively rare. In one of the few cases, the FDIC filed a civil suit in March against three former executives at Washington Mutual for risky lending. The executives at the failed bank were accused of taking “extreme and historically unprecedented risks” in their lending practices in order to maximize their compensation. The executives have denied the charges. Federal authorities have been investigating the bank since it failed and was sold to JPMorgan Chase in 2008.

Earlier this year, the Justice Department ended its criminal investigation of Angelo Mozilo, the former CEO of Countrywide Financial, a major subprime lender. It did not bring charges. Mozilo had settled civil charges with the SEC for $67.5 million—though that was for insider trading, not bad lending.

And when the Justice Department did get a conviction of a mortgage company CEO in April, the executive, Lee Farkas of Taylor, Bean & Whitaker, was found guilty of bank fraud, wire fraud, securities fraud and conspiracy—offenses not specific to the company’s mortgage operations. It was nonetheless touted as “the most significant criminal prosecution to date rising out of the financial crisis.”

For the most part, banks struggling with allegations of bad lending have faced demands from investors to buy back troubled mortgages. The banks have at times resisted, attributing the losses to broader economic turmoil.

The relative lack of regulatory action was highlighted in a New York Times article by Gretchen Morgenson and Josh Rosner, which detailed the case of NovaStar Financial, a subprime lender that the SEC never took any action against. That’s despite a damning report from HUD, lawsuits from homeowners, cease-and-desist orders from state regulators and repeated tips from short-sellers. (The SEC declined to comment on its investigation.)

The government has recently shown signs of taking action when it comes to recouping its own losses. The Justice Department sued Deutsche Bank in early May, alleging that a unit within the German bank “recklessly” endorsed bad mortgage loans in order to get government guarantees that would 1) make the loans easier for the bank to resell to investors, and 2) put the government on the hook for losses.

The lawsuit alleges that Deutsche hid evidence that the loans were bad, costing the government millions in insurance payouts while the bank made profits off the resale. Deutsche told the Wall Street Journal that most of the allegations were about activity that occurred before the unit became a subsidiary of the bank.   

Though the suit against the mortgage lender was believed to be the first of its kind, prosecutors have said that it probably wouldn’t be the last. Here’s the Journal:

It wouldn't be a "fantastical stretch to think we are looking at other financial institutions as well," Mr. Bharara said at a news conference, declining to be more specific.

Next Step: Scandals of Securitization

The Journal reported this week that state attorneys general in New York and California are stepping up investigations of a whole range of bank activities—from the origination of mortgage loans to the packaging of mortgage securities.

New York’s attorney general Eric Schneiderman also recently announced investigations into the packaging and selling of mortgage-backed securities by a number of big banks. Morgan Stanley, Goldman Sachs, Bank of America, Royal Bank of Scotland, UBS, JPMorgan and Deutsche Bank are said to be the subjects. Of course, there’s no guarantee that anything will come of these. Schneiderman’s predecessor—now New York Gov. Andrew Cuomo—also had been investigating whether several banks had lied to rating agencies about the quality of their mortgage securities, and no charges resulted from that investigation.

The Justice Department also declined to bring criminal charges against executives at AIG, the insurer that sold financial instruments that allowed major financial firms to place bets against the housing market—and sometimes, against the same financial products they sold to investors. As of last year, the SEC reportedly was still investigating.

Bear

In 2009, prosecutors lost the first major criminal case of the financial crisis when the jury acquitted two Bear Sterns hedge fund managers accused of securities fraud and lying to investors about their failing investments.

And Then Came Those Fancy, Complex Securities Called CDOs

We’ve documented a number of investigations into the big banks’ dealings of mortgage-backed securities known as collateralized debt obligations. The Securities and Exchange Commission of course settled a civil suit against Goldman Sachs last year for $550 million, though its related suit against Goldman trader Fabrice Tourre is ongoing.

As we noted earlier this month, Goldman Sachs disclosed in a regulatory filing that it had received subpoenas from regulators regarding the same deal as well as other CDO deals. And it’s not just regulators: The Journal reported on Friday that Goldman executives expect to receive subpoenas soon from U.S. prosecutors seeking more information.

We also reported late last year that the SEC has an investigation into a JPMorgan Chase deal called “Squared.” The agency formally warned two execs involved in the deal that it may take action against them, as Bloomberg reported in April. JPMorgan disclosed in a recent filing that it is in “advanced negotiations” with regulators but didn’t specify which deals were being scrutinized.

UBS, Deutsche, and Citigroup also were last year reported to have received civil subpoenas from the SEC as part of an investigation into CDO dealings. (See our cheat sheet from around that time.) The Journal also reported that Morgan Stanley and Goldman Sachs were under early-stage criminal scrutiny by the Justice Department.

Finding the Flaws in the Foreclosure Process

Charges against the banks could be coming for their foreclosure-related problems. Huffington Post reported last week that government audits of Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial accused the banks of engaging in fraud with government-guaranteed mortgages. There are few details about what are in the audits, but here’s how HuffPo explains the allegations:

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

The Department of Housing and Urban Development’s inspector general conducted the audits and has referred the findings to the Justice Department, which will have to decide whether to bring charges. (Bank of America and Wells Fargo declined to comment to Reuters at the time—the others weren’t available for comment.)

Both federal regulators and 50 state attorneys general also have been conducting investigations since news of “robo-signers” and flawed foreclosure practices by the nation’s biggest banks exploded into a full-blown scandal last fall.

There have been numerous reports  of divisions within the two coalitions of investigators. Among the federal agencies, the historically bank-friendly Office of the Comptroller of the Currency had pushed for more modest fines compared with the proposals favored by other federal agencies.

As we’re reported, federal regulators have issued “consent orders” that require banks to perform reviews of their own foreclosure actions and compensate borrowers for financial injuries. From our earlier reporting:

The reviews are expected to culminate late this year or early next year, when checks are scheduled to go out to victims. Regulatory sources told us that the total amount sent to eligible homeowners would likely be disclosed. Even before this phase, observers may get a hint of what's happening if, as expected, regulators levy financial penalties against the banks. The findings of the reviews will determine the size of those penalties, regulatory officials said.

The state attorneys general are also, along with Justice Department negotiators, trying to reach a settlement with the banks. There’s also dissent among their ranks: At least eight Republican attorneys general have voiced disagreement with any proposal that would require banks to cut borrowers’ mortgage debt. Virginia’s attorney general compared the debt writedowns to welfare.

Banks, meanwhile, have reportedly proposed paying $5 billion to settle the states’ foreclosure investigation. That’s a quarter of the $20 billion penalty that had been previously proposed.

More Flaws in the Fallout After Foreclosure

Other investigations and lawsuits against the banks have focused less on their dealings with homeowners and more on the fallout after foreclosure. For instance, the City of Los Angeles earlier this month filed a civil complaint against Deutsche Bank, alleging that the bank illegally evicted tenants and let foreclosed homes fall into disrepair and cause neighborhood blight. Deutsche, in this case, was the trustee for the investors who technically owned the loans. The city said that made Deutsche “contractually responsible” for maintenance and actions against tenants—but the bank said the city “filed this lawsuit against the wrong party.”

The L.A. Times notes that Deutsche and other banks have faced similar suits before and gotten off the hook:

In 2008, the city of Cleveland sued Deutsche Bank and other financial institutions alleging that subprime mortgage lending practices had resulted in widespread foreclosures and blight. A judge dismissed the suit.

Follow on Twitter: @mariancw

Cheat Sheet on Bank Investigations and the Probes That Have Petered Out

by Marian Wang
ProPublica, May 24, 2011

As we and many others have noted, no top banking executives have been successfully prosecuted in connection with the financial crisis: not for making the bad loans that fed the mortgage machine, not for lying about the quality of the mortgages, and not for foreclosing improperly when homeowners struggled to make loan payments.

But there have been many investigations. Some are still pending, others seem to have fallen by the wayside. Here’s our overview of what the banks have been accused of doing at each stage of the mortgage machine.

Let us know in the comments section if we’ve left off any significant investigations that have died quiet deaths or are still ongoing.

The First Step in the Machine: Risky Lending and Underwriting

Regulatory action against the major lenders has been relatively rare. In one of the few cases, the FDIC filed a civil suit in March against three former executives at Washington Mutual for risky lending. The executives at the failed bank were accused of taking “extreme and historically unprecedented risks” in their lending practices in order to maximize their compensation. The executives have denied the charges. Federal authorities have been investigating the bank since it failed and was sold to JPMorgan Chase in 2008.

Earlier this year, the Justice Department ended its criminal investigation of Angelo Mozilo, the former CEO of Countrywide Financial, a major subprime lender. It did not bring charges. Mozilo had settled civil charges with the SEC for $67.5 million—though that was for insider trading, not bad lending.

And when the Justice Department did get a conviction of a mortgage company CEO in April, the executive, Lee Farkas of Taylor, Bean & Whitaker, was found guilty of bank fraud, wire fraud, securities fraud and conspiracy—offenses not specific to the company’s mortgage operations. It was nonetheless touted as “the most significant criminal prosecution to date rising out of the financial crisis.”

For the most part, banks struggling with allegations of bad lending have faced demands from investors to buy back troubled mortgages. The banks have at times resisted, attributing the losses to broader economic turmoil.

The relative lack of regulatory action was highlighted in a New York Times article by Gretchen Morgenson and Josh Rosner, which detailed the case of NovaStar Financial, a subprime lender that the SEC never took any action against. That’s despite a damning report from HUD, lawsuits from homeowners, cease-and-desist orders from state regulators and repeated tips from short-sellers. (The SEC declined to comment on its investigation.)

The government has recently shown signs of taking action when it comes to recouping its own losses. The Justice Department sued Deutsche Bank in early May, alleging that a unit within the German bank “recklessly” endorsed bad mortgage loans in order to get government guarantees that would 1) make the loans easier for the bank to resell to investors, and 2) put the government on the hook for losses.

The lawsuit alleges that Deutsche hid evidence that the loans were bad, costing the government millions in insurance payouts while the bank made profits off the resale. Deutsche told the Wall Street Journal that most of the allegations were about activity that occurred before the unit became a subsidiary of the bank.   

Though the suit against the mortgage lender was believed to be the first of its kind, prosecutors have said that it probably wouldn’t be the last. Here’s the Journal:

It wouldn't be a "fantastical stretch to think we are looking at other financial institutions as well," Mr. Bharara said at a news conference, declining to be more specific.

Next Step: Scandals of Securitization

The Journal reported this week that state attorneys general in New York and California are stepping up investigations of a whole range of bank activities—from the origination of mortgage loans to the packaging of mortgage securities.

New York’s attorney general Eric Schneiderman also recently announced investigations into the packaging and selling of mortgage-backed securities by a number of big banks. Morgan Stanley, Goldman Sachs, Bank of America, Royal Bank of Scotland, UBS, JPMorgan and Deutsche Bank are said to be the subjects. Of course, there’s no guarantee that anything will come of these. Schneiderman’s predecessor—now New York Gov. Andrew Cuomo—also had been investigating whether several banks had lied to rating agencies about the quality of their mortgage securities, and no charges resulted from that investigation.

The Justice Department also declined to bring criminal charges against executives at AIG, the insurer that sold financial instruments that allowed major financial firms to place bets against the housing market—and sometimes, against the same financial products they sold to investors. As of last year, the SEC reportedly was still investigating.

Bear

In 2009, prosecutors lost the first major criminal case of the financial crisis when the jury acquitted two Bear Sterns hedge fund managers accused of securities fraud and lying to investors about their failing investments.

And Then Came Those Fancy, Complex Securities Called CDOs

We’ve documented a number of investigations into the big banks’ dealings of mortgage-backed securities known as collateralized debt obligations. The Securities and Exchange Commission of course settled a civil suit against Goldman Sachs last year for $550 million, though its related suit against Goldman trader Fabrice Tourre is ongoing.

As we noted earlier this month, Goldman Sachs disclosed in a regulatory filing that it had received subpoenas from regulators regarding the same deal as well as other CDO deals. And it’s not just regulators: The Journal reported on Friday that Goldman executives expect to receive subpoenas soon from U.S. prosecutors seeking more information.

We also reported late last year that the SEC has an investigation into a JPMorgan Chase deal called “Squared.” The agency formally warned two execs involved in the deal that it may take action against them, as Bloomberg reported in April. JPMorgan disclosed in a recent filing that it is in “advanced negotiations” with regulators but didn’t specify which deals were being scrutinized.

UBS, Deutsche, and Citigroup also were last year reported to have received civil subpoenas from the SEC as part of an investigation into CDO dealings. (See our cheat sheet from around that time.) The Journal also reported that Morgan Stanley and Goldman Sachs were under early-stage criminal scrutiny by the Justice Department.

Finding the Flaws in the Foreclosure Process

Charges against the banks could be coming for their foreclosure-related problems. Huffington Post reported last week that government audits of Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial accused the banks of engaging in fraud with government-guaranteed mortgages. There are few details about what are in the audits, but here’s how HuffPo explains the allegations:

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

The Department of Housing and Urban Development’s inspector general conducted the audits and has referred the findings to the Justice Department, which will have to decide whether to bring charges. (Bank of America and Wells Fargo declined to comment to Reuters at the time—the others weren’t available for comment.)

Both federal regulators and 50 state attorneys general also have been conducting investigations since news of “robo-signers” and flawed foreclosure practices by the nation’s biggest banks exploded into a full-blown scandal last fall.

There have been numerous reports  of divisions within the two coalitions of investigators. Among the federal agencies, the historically bank-friendly Office of the Comptroller of the Currency had pushed for more modest fines compared with the proposals favored by other federal agencies.

As we’re reported, federal regulators have issued “consent orders” that require banks to perform reviews of their own foreclosure actions and compensate borrowers for financial injuries. From our earlier reporting:

The reviews are expected to culminate late this year or early next year, when checks are scheduled to go out to victims. Regulatory sources told us that the total amount sent to eligible homeowners would likely be disclosed. Even before this phase, observers may get a hint of what's happening if, as expected, regulators levy financial penalties against the banks. The findings of the reviews will determine the size of those penalties, regulatory officials said.

The state attorneys general are also, along with Justice Department negotiators, trying to reach a settlement with the banks. There’s also dissent among their ranks: At least eight Republican attorneys general have voiced disagreement with any proposal that would require banks to cut borrowers’ mortgage debt. Virginia’s attorney general compared the debt writedowns to welfare.

Banks, meanwhile, have reportedly proposed paying $5 billion to settle the states’ foreclosure investigation. That’s a quarter of the $20 billion penalty that had been previously proposed.

More Flaws in the Fallout After Foreclosure

Other investigations and lawsuits against the banks have focused less on their dealings with homeowners and more on the fallout after foreclosure. For instance, the City of Los Angeles earlier this month filed a civil complaint against Deutsche Bank, alleging that the bank illegally evicted tenants and let foreclosed homes fall into disrepair and cause neighborhood blight. Deutsche, in this case, was the trustee for the investors who technically owned the loans. The city said that made Deutsche “contractually responsible” for maintenance and actions against tenants—but the bank said the city “filed this lawsuit against the wrong party.”

The L.A. Times notes that Deutsche and other banks have faced similar suits before and gotten off the hook:

In 2008, the city of Cleveland sued Deutsche Bank and other financial institutions alleging that subprime mortgage lending practices had resulted in widespread foreclosures and blight. A judge dismissed the suit.

Follow on Twitter: @mariancw

Why Elizabeth Warren Scares Republicans

By Brian Dockstader

May 23, 2011 - 6:28pm ET

“There is only one person who should lead the Consumer Financial Protection Bureau and that is the brilliant advocate who championed it, the remarkable administrator who has helped get it off the ground, and the middle class champion who will make it work – Elizabeth Warren.”

—Robert L. Borosage, Co-director, Campaign for America's Future

That is a statement that even Republicans couldn't argue with--with the small exception that Republicans view these as negative qualifications. The rest stands, however, because no one is arguing that Elizabeth Warren shouldn't be appointed director of the Consumer Financial Protection Bureau (CFPB) because she isn't the best person for the job. No, the opposition to her comes from the exact opposite position: 

Republicans oppose Elizabeth Warren because she is too good at her job.

Since when is being too good at your job--too qualified, too committed--a bad thing? Well if you are a conservative, bankrolled by Wall Street and beholden to their interests, these are all bad qualities because what you really want is to destroy all financial regulation.

The CFPB was a key part of the 2010 Wall Street Reform and Consumer Protection Act that sought to rebuild the regulatory framework established as a response to the Great Depression that had been slowly dismantled by conservatives over the years. All honest observers, even many prominent conservatives, have acknowledged the role of financial deregulation in contributing to the financial collapse and subsequent recession. Wall Street reform and the CFPB were an attempt to make sure such an economy-devastating collapse never happened again. Wall Street had to be reined in. No more playing roulette in the Wall Street casino with the US economy. What could be more sensible than that?

Jump back to now--the CFPB has been without a director at the helm since it was established, and it is legally mandated to fill that position by July. During this time, Elizabeth Warren has proven "her value as an advocate and as an administrator" while setting up the "only financial bureau dedicated to the protection of consumers." Meanwhile, Wall Street lobbyists and the best minority party they can buy have been hard at work trying to cripple the bureau, to make sure the financial sector remains the dangerous and lawless Wild West that made a handful of people incredibly rich while it wrecked the economy for the rest of us. In short, they want to make sure there is no sheriff in town.

Of course we have a sheriff, ready and waiting, and she just happens to be incredibly qualified and dedicated. She set up the bureau and she has persevered in the face of intense resistance from the Right. She is great at her job. She is fearless.

That has the outlaws (and their henchmen) terrified.

Thus we have Tuesday's Republican-led House Oversight Committee hearing entitled "Who's Watching the Watchmen?," which will again put Warren in the interrogation seat. (Note the irony that after the greatest financial meltdown since the Great Depression, Republicans are more concerned with who is watching the sheriff than who is watching the outlaws who collapsed the system. Talk about distorted priorities.)

In case you were wondering how a committee could be so focused on shackling the sheriff while ignoring the outlaws, you need only look at who is running the show: Rep. Patrick McHenry (R-NC). One has ample reason to question the motives of Warren's inquisitor. Even before McHenry convened the hearing to question Warren about the CFPB he had already co-sponsored a bill that seeks to eliminate her position entirely! (Talk about a rough crowd.) So Mr. McHenry is already coming into this hearing with a clear agenda, one that includes hog-tying the sheriff and shipping her off on the first train out of town--but why? For whose benefit? What's the motive? Well, let's just look at Rep. McHenry's top campaign funders in 2010 (show me the money!):

#1: Wells Fargo - $15,550
#3: Deloitte Touche Tohmatsu - $11,500
#5: American Bankers Association - $10,000
#5: Bank of America - $10,000
#5: Ernst & Young - $10,000
#5: PricewaterhouseCoopers - $10,000
#5: Independent Insurance Agents & Brokers of America - $10,000
#5: American Society of Anesthesiologists - $10,000 (seems relevant, since you'd have to be sedated to not see the quid pro quo going on here)

Well it looks like McHenry has a posse of his own! And I see a trend: McHenry's financial backers read like a laundry list of people who have a vested interest in seeing the sheriff run out of town (and the police station burnt to the ground). Perhaps there might be a connection between what the outlaws want and committee's agenda? Hmm..

Political puppetry aside, it is also important to note that the CFPB isn't some all-powerful agency that is single-handedly restructuring the entire financial sector. It is simply one modest and sensible part of a larger set of reforms that were viewed by many as too moderate too begin with. We are talking about making credit lenders more accountable for their practices--cutting down on the fine print, outrageous fees and other abuses that have turned all too many Americans households into money farms for large banks. You can't get less controversial than that.

Nevertheless, the sheriff is going to be put on trail, to be berated and heckled in the town square, again. This has become a bit of a theme for the Republican-led House Oversight Committee--attack the humble defender of the middle class while pretending that the financial crisis never happened. This game is no secret either. After her first appearance before the tribunal congressional hearing (entitled "Oversight of the Consumer Financial Protection Bureau"--notice the consistent hang up on horribly misplaced priorities), Joe Nocera identified the true agenda of the committee in The New York Times:

And thus the real purpose of the hearing: to allow the Republicans who now run the House to box Ms. Warren about the ears. The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers — and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans.

You can be certain that Tuesday's hearing will be no different.

Lest I give the impression that this is all about Elizabeth Warren, it should be pointed out that the Senate Republicans have vowed to filibuster any nominee to head the CFPB until the majority concedes to their demands to gut the fledgling bureau. They may be terrified by the prospect of a strong, competent leader like Warren running the CFPB, but that doesn't mean they would be satisfied with a weak leader either. No, the whole bureau must fall to their quest to erase financial reform and keep the Wild West of Wall Street alive and well (until the next completely preventable meltdown).

So the agency needs a leader to be truly effective, however Republicans refuse to allow any leader until the bureau is made completely ineffective. What's a president to do? That much is simple:

The president should stand up to this outrageous extortion. He has the power to make a recess appointment when the Senate goes out of session at the end of this month. He should use that power to appoint Elizabeth Warren, a true champion of working families to head up the agency. It is time to act.

President Obama must stand up to the right-wing obstructionists and make the case for Elizabeth Warren and financial reform. Then, after Republicans again declare they don't care about protecting the country from another financial meltdown and recession, President Obama should use his constitutionally authorized authority to use a recess appointment to make Elizabeth Warren the director of the Consumer Financial Protection Agency. We need it. She deserves it. President Obama can do it. Outlaws be damned. Sign the petition to the President calling for a recess appointment for Elizabeth Warren.

♦ ♦ ♦

Update: To give you an idea of how good (and completely non-controversial) Elizabeth Warren is, the head of the Oklahoma Banker's Association, who at one point (before he knew her) described Warren as "akin to the Antichrist" has been completely won over by her abilities and is now pushing President Obama to give her a recess appointment to direct the CFPB. Really.

 

Update #2: The hearing is scheduled to begin at 1:15pm today (Tuesday). Streaming video should be available on the committee website. As you watch the hearing, see if you can guess which members of Congress have pocketed wagon-fulls of cash from the banking industry. @OurFuturedotorg will also be live tweeting the hearing.

Update #3 (2:40pm): Wow, that hearing got nasty. It was clear from the very beginning that Rep. Henry wanted to attack Elizabeth Warren & the CFPB (his campaign contributions preordained that), but it got so bad that Rep. Yarmuth actually had to apologize to Warren for the rude and disrespectful behavior of the chair (Rep. Henry) and his snarky comments. After watching that circus it is even more clear just how much Republicans fear Elizabeth Warren and financial reform.

Kudos to Rep. Maloney for pointing out that the title of the GOP's hearing should have actually been "Let's Pretend the Financial Crisis Never Happened."