The Oscar-winning movie “Inside Job,” with its guerrilla journalism and name calling, is a bit overblown, but its message is clear and correct: The big banks, federal agencies and leading economists caused the recent financial crash and recession with their greed and hubris and blind devotion to deregulation.
What’s more, as we try to climb out of the mess, many Americans still suffer from job and mortgage insecurity while many of the rich who brought this on enjoy, once again, huge profits, bonuses and reduced taxes. In short, as the documentary suggests, a financial struggle exists between the big financial industry and the millions of ordinary Americans trying to cope with a reduced standard of living.
The conflict is out of balance. Rank-and-file Americans need a champion to even the scales and protect them from the lingering effects of recession and the grasping requirements of an unregulated financial system.
That’s where Elizabeth Warren comes in. She is a Harvard law professor and longtime consumer advocate. She led in pressing for creation of a Consumer Financial Protection Bureau and now is running the new agency as a special assistant to the president and special adviser to Treasury Secretary Timothy Geithner. Funding is from the Federal Reserve System, so it looks beyond the reach of congressional critics. It starts work officially July 21.
It will monitor Wall Street and the banking industry to regulate products it considers “unfair, deceptive or abusive” and press for flexibility in modifying mortgage terms. It should hit abuses by the big players but avoid needless rules for smaller community banks.
Ms. Warren is outspoken in her promotion of “the marketplace that American families deserve.”
In her new role, she told the House Financial Services Committee that she welcomed congressional oversight and recognized that Congress could overturn any rule-making by the new bureau. Its web page, at www.consumerfinance.gov, combines a sunny, protective approach with strict warnings to the financial industry. It says that “companies shouldn’t compete by figuring out how to fool you best.”
No wonder that the big bankers and their friends among Republican leaders hate and fear her. House Financial Services Committee Chairman Spencer Bachus, R-Ala., called the bureau ”perhaps the single most powerful agency ever created by act of Congress.” Republican Sen. Richard Shelby of the Senate Banking Committee accused her and the bureau of a “regulatory shakedown” of mortgage servicers in their help for a coalition of the 50 state attorneys general attacking foreclosure fraud.
Of course Ms. Warren is controversial, but we need someone on the working class’ side.