Illinois' own Melissa Bean has become a divisive figure on Capitol Hill these days. As the lead negotiator for the New Democrats, the North Suburban congresswoman has become a key ally to the financial services industry as they continue to fight the creation of a Consumer Financial Protection Agency (CFPA). As we recently noted, Bean is thought to be preparing a banking-friendly amendment that would water down the long-overdue consumer protections being pushed by the Obama administration. According to Reuters, she's poised to act sooner rather than later:
A Democratic lawmaker hopes to derail congressional efforts that would allow states to adopt stricter laws for firms offering mortgages and other financial products, a source familiar with the matter said on Monday.
Democratic Representative Melissa Bean could as early as Wednesday propose an amendment to a House of Representatives bill that would remove a provision giving states more rights over federal laws to protect consumers from risky financial products, the source said.
While the language of Bean's amendment has yet to be unveiled, the goal is apparently to preempt states' authority to set and enforce the sort of strict rules that would protect unwitting consumers from getting gouged by risky financial products. Among the outspoken critics of a preemption clause is Illinois' own Attorney General Lisa Madigan, who has repeatedly made the case for why more robust state rules are essential to protecting consumers. The Woodstock Institute explains:
Rather than setting strong national standards which states can build on to address local needs, this approach would perpetuate the status quo which allowed national banks to rake in billions in high risk loans, bait-and-switch credit card rates, and deceptive overdraft fees––all while states were forbidden to act.
As the Sunlight Foundation points out, Bean and her colleagues on the House Financial Services Committee haven't been doing the bidding of corporate interests for free. The same banks and credit card companies whose profit margins would be protected by preemptive laws have rewarded those committee members with some princely sums. None has benefited more than Bean, who has so far pulled in $269,800 (43 percent of her total campaign haul) this year from the finance, insurance and real estate sectors.
Encouragingly, newspaper editorial boards and citizen advocates are pushing back against Bean's amendment even before it hits the committee. Meanwhile, Public Citizen is ratcheting up the effort through the new Americans for Financial Reform coalition, noting that "our representatives in Washington have to hear from us -- the people who were put at risk by the big banks." Learn more about their campaign here.
(UPDATE): Bean's spokesman Jonathan Lipman responded with the following statement:
"Congresswoman Bean and the New Dems have promoted strong regulatory reform that institute tough new consumer and investor protection rules, credit card reforms, higher capital requirements, and executive pay reforms, all of which put mandates on these financial institutions that they don't like. Bean and New Dems have been focused on increasing transparency, reducing systemic risk, and preserving the ability for end user businesses to hedge their risk."
Comments
dana (not verified) on Tue, 10/13/2009 - 18:17
The CFPA would have authority to determine which products consumers can choose from. In short, the bill would create a regulatory overlay of the entire business community, extending far beyond traditional financial services. We need to take control of consumer choice. How does CFPA affect you? http://www.friendsoftheuschamber.com/issues/index.cfm?ID=469
Ellen Beth (not verified) on Tue, 10/13/2009 - 21:31
Dana is overstating the point by a longshot and quotes the U.S. Chamber of Commerce as her source telling us that she gets her information from big big business rather than the small businesses for which she claims to have concern. The CFPA would not affect most businesses because they don't extend their own credit, they take Visa and Discover Card. If a mom and pop grocery store has created its own credit card, it should have to comply with credit regulations. The thing is that there are few mom and pop anything anymore and they don't tend to create their own credit facilities. The regulation is not nearly as strong as Dana suggests. It does not "create a regulatory overlay of the entire business community." It authorizes some new safety regulations for new financial products, creates some standards for mortgage products, enforces existing state consumer protections, and imposes some duties of care on brokers and financial advisors. It also takes over regulation of mortgage loans from OTC and OCC which tended to treat the companies they regulated as favored customers rather than the obedient, law abiding regulated companies they are supposed to be.
L Rice (not verified) on Tue, 10/13/2009 - 22:04
Instead of relying on half-truths being perpetuated by the industry, you should read the legislation that would authorize the CFPA. It creates no new laws; it only changes the regulatory framework for existing laws. If a business is currently covered by the OTS or OCC, then, to the extent that business is involved in issuing credit to consumers, then it would be covered by the CFPA. If the corner grocery store issues credit to consumers, then it would be covered - as it should be. If it does not issue credit, then it would not be covered. The CFPA just will now enforce laws that have not been ardently enforced before.
Knoxville (not verified) on Sat, 10/17/2009 - 19:38
Apparently you are not aware of Rep. Bean's proposed amendment to Rep. Barney Frank's bill that creates a CFPA.
Are you familiar with Rep. Bean's position in the debate over regulatory preemption?
As I understand it, what she is proposing, among other things, is to strip from the states their rights to enforce their own regulations on those who would prey on the citizens of their states by pushing their risky financial products (subprime mortgages, high-interest credit card loans, and payday loans).
In many cases, state regulations are stricter than federal regulations. As I understand it, the end result would be to make regulations in Vermont stronger, but to make regulations in say, New York, much weaker.
I have written to her Communications Director to ask simple questions about multiple reports regarding what she is trying to do, but he has only directed me to a website that does not answer the question.
Knoxville (not verified) on Sat, 10/17/2009 - 19:29
I am working on a post for Firedoglake about Rep. Bean’s apparent efforts to minimize consumer protection in the financial services industry. I have been in contact with her staff, as well as with members of the staff of Rep. Frank, trying to get them to clarify her position on regulatory preemption. So far, they have not been able to do so satisfactorily.
I am contacting you and others to ask if you would be interested in making a statement for the Firedoglake post.
More specifically, would Progress Illinois oppose Rep. Bean’s 2010 bid for reelection if she continues her efforts to minimize consumer protection in the financial services industry?
Would you be willing to join with other groups in running ads against Congresswoman Bean in the near future in order to better inform her constituents of what she is trying to do?
Please feel free to contact me at the email address I provided to write this comment.
Post new comment
Progress Illinois' intention is to foster community and to maintain a comfortable and constructive blogging environment. While we encourage and appreciates different points of view, we do not consider it our duty to give a voice to anybody with an opinion.
Discussion on this site is moderated. All comments submitted will be automatically held for review by the editors before posting. Your comment will not appear on the site until it has been approved.
We will not publish comments that we consider:
Please leave a name or nickname when commenting, as it makes it easier for others to respond directly.