Posts Tagged ‘consumer financial protection agency’

Elizabeth Warren Predicted The Financial Collapse Back In 2004


Elizabeth Warren,  a Harvard Law Professor and the current chairwoman of the Congressional Oversight Committee in charge of overseeing usage of the TARP bailout funds, predicted the financial collapse long before anyone else was talking about it.

In this 2004 interview with Dean Lawrence R. Velvel where she discusses her book, The Two Income Trap,  she reveals the instability that pervades the lives of most middle class Americans and why so many end up in Bankruptcy court. She says that in order to keep up with the expenses, people with median incomes have been forced to borrow and borrow. Why? Because the median income in the United States is increasingly not enough to keep up with the cost of living. She talks about the fixed expenses that families have, such as the mortgage payment, health insurance, and educational expenses as having grown dramatically in the last generation. It is important to understand, here, that, these fixed expenses can’t be cut back.  That’s why they’re called “fixed expenses.”


Tennessee Republican Now Against Financial Reform


monoploly The Republican senator from the state of Tennessee won’t support the current financial reform bill authored by Democratic senator Chris Dodd because he says it would give consumers too much protection.

His sticking point is the proposed Consumer Financial Protection Agency (CFPA) that has been proposed by financial experts like Elizabeth Warren. Even though there have already been compromises made on the agency, such as locating it within the Federal Reserve instead of it being a completely separate and independent entity, Senator Corker still believes it will have too much power.

He said of the agency :

You can have them making rules and enforcing things that undermine the safety and soundness, for instance, forcing an institution in the pursuit of social justice for instance – I’m just making up something – to make loans to people that have no ability to pay it back.

Obviously, the good Senator Corker is one of those who believe that consumers borrowing more than they could afford to pay back was the sole cause of the collapse. Conveniently, he leaves out Wall Street who created mortgage securitization in the first place in order to take advantage of extremely low interest rates. He neglects to mention the banks who rapaciously demanded more and more mortgages to sell to Wall Street, and the mortgage brokers that convinced families that they could afford $400, 000 dollar homes on meager salaries. The details are beyond the scope of this article, but let’s just say that the financial collapse wasn’t only due to people borrowing more money than they could afford to pay back.

The bottom line is that Republicans don’t want the CFPA at all. In fact, they would like nothing better than to stamp out all financial reform because the banking industry doesn’t like it. An agency that exists only to protect the American people from the predations of Wall Street and the big banks? No, that’s too much protection!

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