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Don't kill the public option of financial reform

doddfinareg.JPGIt's disappointing to hear that Chris Dodd is thinking of dropping the Consumer Financial Protection Agency to attract bipartisan support for his financial regulation bill. According to the Wall Street Journal, Dodd's offer is conditional on "a beefed-up consumer-protection division within another federal agency," but the whole point of the CFPA is that those other agencies tend to abandon that mission because it's not core to their responsibility. The Federal Reserve has a lot of consumer protection power, but very little of its was exercised in the run-up to the crisis because the Federal Reserve isn't interested in consumer protection.

More broadly, so what if Republicans refuse to pass financial regulation with the CFPA? At some point, Democrats have to be willing to choose something as a campaign issue. The problem with sacrificing health care for an electoral argument is that a lot of people would die while you waited 15 years for the next shot at reform. The problem with global warming is that the Earth will cook while you hang around for a more enlightened Congress. Not so with financial regulation.

Frankly, we're not even likely to have any quick repeats of the crisis, as Wall Street is being careful now and will probably be careful for awhile. And an insufficient regulatory package is unlikely to prevent the next crash, just like taking a half-cycle of antibiotics won't stop you from getting sick. Meanwhile, Democrats are going to let Republicans kill the CFPA and weaken the bill and then hammer them for being too close to the banks? It's nuts.

The CFPA is the public option of financial reform. It's the only part of it that voters can easily understand. It's the only policy that's popular on its own. It's the only piece of it that you can actually use to message. Kill the CFPA and you're in a morass of arguments about appropriate levels of leverage and transparency. Kill it in a back room before the public has even turned their attention to the issue, and no one will know that it ever lived, or that Democrats fought for it and Republicans took directions from the banks and murdered it.

Photo credit: Larry Downing/Reuters

By Ezra Klein  |  January 15, 2010; 12:46 PM ET
Categories:  Financial Regulation  
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Comments

I understand your point that "those other agencies tend to abandon that mission because it's not core to their responsibility." However, I am not sure it would be as dire as you say. You give the example of the Fed, but what if you actually had a high level Treasury official leading the consumer protection division, e.g. an Undersecretary. If that were the case, I think you could still have robust consumer protections provided through the Treasury Dept. Would it still depend on who heads up the Treasury Dept., and therefore depend on who is President? But wouldn't that be true with a stand-alone Consumer Protection Agency, where the President nominates someone?

Posted by: gocowboys | January 15, 2010 1:42 PM | Report abuse

"no one will know that it ever lived, or that Democrats fought for it and Republicans took directions from the banks and murdered it."

Dropping a popular proposal to attract the support of an obstructive minority which negotiates in bad faith sure is a funny way of fighting for it.

Posted by: BigTunaTim | January 15, 2010 2:08 PM | Report abuse

Isn't Dodd scheduled to be flushed down the memory hole?

Posted by: zosima | January 15, 2010 2:27 PM | Report abuse

"The CFPA is the public option of financial reform. It's the only part of it that voters can easily understand. It's the only policy that's popular on its own. It's the only piece of it that you can actually use to message. Kill the CFPA and you're in a morass of arguments about appropriate levels of leverage and transparency. Kill it in a back room before the public has even turned their attention to the issue, and no one will know that it ever lived, or that Democrats fought for it and Republicans took directions from the banks and murdered it." - Ezra Klein, Washington Post

I am glad to see that Ezra thinks the Public Option is as important as central to real reform as CFPA. However, for the longest time in his frequent appearances on MSNBC, much to my chagrin he has never lifted a finger to advocate the PO.

He sarcastically advises the Congress to kill it surreptitiously before the public realizes its presence and its value.

Unfortunately, on Ezra's metric the President gets an F. He has been singing its praises for the longest time. As the President said PO was vital to realize the key objective of "cost control". His sermons built a majority among those supporting Health Care Reform. It is absolutely clear that Insurance Lobby finally succeeded to have its tools in Congress murder the Public Option in broad daylight. If he wanted a higher grade President should have never brought it up or at least had it assassinated before it got absorbed in public's consciousness.

Not being able to score an A on Ezra scale, only thing that stays with the public is constant vacillation, prevarication and capitulation to Corporate interests. Many progressive Democrats will be totally disaffected feeling ignored and betrayed. Many independents will be turned off by the three shuns mentioned above.

Significant number of the base may end up sitting at home come November. Independents will do double damage if many of them vote for the other parties. Either way there will be impact in 8010 and potentially in 8012.

Once again I hope the President follows Ezra's advice in the future. :)

doubleaseven@alumni.usc.edu

Ezra's Article http://voices.washingtonpost.com/ezra-klein/2010/01/dont_kill_the_public_option_of.html

Posted by: doubleaseven | January 15, 2010 6:43 PM | Report abuse

It's easy to finger point and blame the financial lobby, and sure they have played a part, but the real and more complicated story is that it's just a bad bill. Have you read the bill and seen all departments and agencies included? It's massive and broad umbrella encompassing mom and pop agencies and companies made up of 1 to 2 employees. Heck, even debt collection agencies are included, because we all know they are an easy target, and they are 100% responsible for the financial collapse.
If the CFPA fails, it is because some may see it for what it is, a massive governmental power grab of a wide range of industries in the name of consumer protection. Narrowly tailor the bill to actually do what it sets out to do, and you may see some progress.

Posted by: privacy3 | January 18, 2010 11:03 AM | Report abuse

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