These next few months are a time of reckoning.
Every so often in American political history, a window for change opens, and the combination of crisis, leadership, and political movement makes big, positive reforms possible.
That window is open now–but barely–and if we don’t act quickly the protectors of the status quo (aka lobbyists, Republicans, and so-called moderate Democrats) will succeed in slamming it shut again.
The needed reforms are clear: affordable health care for all; a targeted jobs program and a humane, effective way to quell the tsunami of foreclosures; and a reorganized, re-regulated Wall Street that gets back to the essential business of investing in the real economy.
When it comes to making crucial financial reforms, we face a determined, well-heeled opposition that will wage a fierce battle every step of the way. As Alan Blinder describes in a recent New York Times op-ed, "The money at stake is mind-boggling, and one financial industry after another will go to the mat to fight any provision that might hurt it." One crucial debate is over the proposed Consumer Financial Protection Agency (CFPA)–akin to the fight over the public option as part ofhealth care reform.
The need for a CFPA couldn’t be more clear. Right now, responsibility for consumer protection is divided among agencies whose primary concern is the safety and soundness of financial institutions. Further, financial institutions–if regulated at all–not only are a key source of funding for those regulators, but they can also choose which regulator they prefer. Elizabeth Warren, a Harvard Law Professor who also chairs the Congressional Oversight Panel, first developed the ideafor a CFPA. She writes, "This regulatory arbitrage has triggered a race to the bottom among prudential regulators and has blocked real consumer protection…"
Warren describes the benefits of the CFPA as bringing "existing federal consumer regulation under one roof", and creating "a home in Washingtonfor people who care about whether families are playing on a level field when they buy financial products…. It will focus on one, driving question: Are consumer financial products explained in a way that consumers can understand and that allows the market to work?" (It must also be said–what a better regulatory landscape we would have if Warren were at Treasury in some substantial way. Naomi Klein calls her "the anti-Summers"; Michael Moore suggests Warren as half of a future presidential ticket. )