America has a financial watchdog. Now it should fight to keep it.
Even before Elizabeth Warren and the Consumer Financial Protection Bureau take on the most deceptive, exploitative consumer rip-offs in the financial services industry, Republicans are maneuvering to make the mission extremely difficult -- if not downright impossible.
Witness House Republican efforts to deny funding to the Treasury Department and Warren during the period when they are tasked with getting the bureau up and running. And Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, said he'd want to "revisit" -- meaning emasculate -- the financial reform bill if the GOP regains the majority in Congress in November. "The consumer agency bothers me the most," Shelby said. "I thought the creation of it and the way it was created was a mistake."
That's why the remarkable coalition that took on the financial titans during the reform debate, and then successfully waged a campaign for Warren's appointment to build the bureau, now needs to reinvigorate its effort to create a truly strong and independent agency.
At the height of the fight, the financial industry mobilized an army of 2,603 lobbyists, including 73 former members of Congress, and it was spending $1.4 million a day to eliminate the agency.
But Americans for Financial Reform (AFR) -- a broad and diverse coalition that included the AARP, the AFL-CIO, the Economic Policy Institute, USAction, the National Urban League and Public Citizen, among others -- worked with congressional allies and organized constituent pressure to ensure a much tougher bill than corporate lobbyists bargained for. And the intent is that the new consumer bureau will work to end credit card rip-offs and debt-relief scams, police the troubled mortgage market and predatory lending, and resolve consumer complaints.
The bureau won't actually have the chance to enforce rules on behalf of consumers until July 2011. Yet as Warren and her colleagues begin to formulate new rules, and as the reality of financial reform begins to take shape, they will face a blitz by Wall Street lobbyists and their congressional enablers.
"The congressional attacks are likely to be attempts to carve out or restrict power, or attempts to get rid of the whole bureau," predicts AFR Executive Director Lisa Donner. "And they can distract people from the job of putting the agency together and getting down to work. Many specific special interests could also wage battles that would take lots of time and energy to defeat."
It will be critical to keep people outside of Washington informed and engaged so that the bureau's fate isn't determined by an "inside game" of lobbyists and their patrons. Warren can lead in that regard, using her bully pulpit to bring attention to industry abuses and making sure the promise of reform is sustained in the staffing of the new agency. (She's off to a promising start in bringing on such tested consumer protectors as Raj Date, the former executive director of the Cambridge Winter Center for Financial Institutions Policy.)
But it will be up to the coalition that fought for Warren's appointment to make lawmakers realize that they cater to special-interest lobbyists at their political peril. Skillful media advocacy will be needed to counter the backroom handshakes and well-funded ad campaigns.
Warren is in place to stand up to the industry -- and President Obama appears to be standing firmly behind her. But even so, Donner argues, "they won't be able to do their jobs unless there is outside pressure pushing back against what will be huge pressure from the financial industry, on the shape of the whole bureau and on every rule that they start to look at. It's our job on the outside to make sure our voices are heard loud and clear."
The fight to create a powerful financial watchdog for consumers is not a right-vs.-left fight, but a wrong-vs.-right fight. Or as Warren puts it: "This is a dispute of families versus banks. It's not conservatives versus liberals." It was inside-outside organizing that carried reform this far, and it is inside-outside organizing that Warren needs at her back now to win this next fight and beyond.
Katrina vanden Heuvel is editor and publisher of the Nation and writes a weekly column for The Post.