Chicago Sun-Times
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Obama to call for new Consumer Financial Protection Agency


WASHINGTON -- Something very useful for consumers may come of this economic meltdown. President Obama wants to create a powerful, user-friendly Consumer Financial Protection Agency.

The agency would eliminate small print, gotcha clauses and legalistic gobblegook in mortgages, credit card and other financial agreements. And the agency would have teeth -- it would have the power to rewrite mortgage laws.

The Obama proposal is modeled after the pending Financial Product Safety Commission legislation introduced last April by Sen. Dick Durbin (D-Ill.)

Durbin got the idea from Elizabeth Warren, a Harvard law professor, who, as it happens, went on to be hired by Congress to watchdog the banking industry Troubled Assets Relief Program. Durbin joined with Sen. Chuck Schumer (D-N.Y.) and Sen. Ted Kennedy (D-Mass.) last spring in asking Treasury Secretary Tim Geithner to create a consumer watchdog agency as part of the Obama administration's overhaul of the financial markets regulatory system.

He did. Obama on Wednesday will roll out his new financial regulatory system, including the proposed commission, which would:

• • Promote "concise and clear information for consumers" and protect "consumers from unfair and deceptive practices."

• • Mandate more disclosure and provide information about costs, penalties and risks so consumers have a "clear disclosure regarding the consequences of their financial decisions."

• • Make it harder for people to sign agreements for expensive mortgages, credit deals, etc. when cheaper "plain vanilla" products would meet their needs.

• • Revamp the mortgage industry so the subprime mess does not happen again -- where borrowers were channeled to risky or more expensive mortgages when they qualified for cheaper, less risky products.

Mortgage brokers would be required "to determine the mortgages they sell are affordable to borrowers."

• • Force lenders to hold on to at least 5 percent of their loans -- rather than sell the entire debt to an investor -- to have an incentive not to make risky loans.


Like the idea of consumer watch dog that has teeth, but this is a small bone or traded off for the sacrifices in current law, that are being asked.

We do not need "new" laws. We simply need people who will uphold the laws we have.

Rewriting law, distracts attention from whether the standing law was upheld.

Rewriting "New" law is about trying to escape scrutiny and mask the possibility that Treasury and Fed governors have acted to violate many important laws and by this technique, gave favorable advantages to a select group of bank firms.

§ 1831 o. Prompt Corrective Action

U.S. Code, Title 12, Chapter 16, § 1831 o Prompt Corrective Action (b)(2)(B)(i) and (d)(1)(A). Capital distributions (dividends) and share buy back programs restricted.

U.S. Code Title 12, Chapter 16, § 1831 o Prompt Corrective Action (f)(2)(F) The appropriate Federal banking agency shall* carry out this section by taking 1 or more of the following actions ... (F) Improving management. ... (i) New election of directors. Ordering a new election for the institution’s board of directors. (ii) Dismissing directors or senior executive officers. Requiring the institution to dismiss from office any director or senior executive officer who had held office for more than 180 days immediately before the institution became undercapitalized.…

U.S. Code Title 12, Chapter 16, § 1831 o. Prompt Corrective Action (i)(1) and (i)(2)(A)(B)(C)(D)(F) ...Restricting activities of critically undercapitalized institutions: To carry out the purpose of this section, the Corporation shall*, by regulation or order— restrict the activities of any critically undercapitalized insured depository institution; and at a minimum (emphasis added), prohibit any such institution from doing any of the following:

(A) Engaging in expansion or acquisition of competing firms
(B) Extending credit for any highly leveraged transaction
(C) Amending the institution’s charter or bylaws.
(D) Making any material change in accounting methods.
(F) Paying excessive compensation or bonuses.

Omissions in the above law, serve to manage neglect of those who are being injured. ...

Rewriting law, allows those who are neglectful, to feel less guilty about favoring firms and injuring Americas.

More detail of laws that were circumvented ...


To put down the good work product of conscientious scholars and those who came before, making careful study of Savings and Loan problems, may appear like hubris, but there is another side. It is also a potentially damaging course. Because those people may have been diligent allies of the United States; acting in good defense of the American people.

America needs officers and regulators, who will act with good stewardship, diligence and purpose of duty, to uphold the existing law.

What the existing laws show is that banks have enjoined desperate-actions of Treasury, who has ushered in a time of social irresponsibility in business.

More detail of laws that were circumvented ...


Interesting insofar as the FDIC's failure to act from 2005 forward was well documented in the OTS OIG [Office of the Inspector General's] Report released 2-26-09 regarding IndyMac Bank, its decline and takeover. Though the OTS OIG report documented both agencies as having had intimate knowledge of IndyMac's increasingly risky position over years, yet these same agencies allowed IndyMac to collect an additional $91 million in deposits during its final 3 months before the July 11 2008 takeover by the FDIC. For its role of fiduciary responsibility to depositors, the FDIC has held depositors – but not IndyMac or its oversight agencies, the FDIC and OTS - responsible for the Bank's misstatements, assurances of safety, and erroneous paperwork. This new "agency" appears to be the response prepared by Tim Geithner, Chuck Schumer, Chris Dodd and Barney Frank. But alas and alack, the IndyMac 10,000, who have spent a year trying to have some direct response from these same officials, have received just a constant FDIC rebuttal that their deposits have slim – to no - chance of full restitution. In terms of full disclosure, the FDIC and its member banks still have no requirement to make depositors clearly aware that FDIC insurance aggregates ALL accounts under 1 tax ID and does not cover each account separately.

Rewriting law in the middle of the crisis, is to side-step duty to uphold existing law.

"We, Consumers are aware our callous Governments working hand in glove with over zealous entrepreneurs and corrupt International Financial Firms are taking us for Fools, Manipulating Facts and Deceiving us. But, we are at Fault too for allowing the establishment to short change us by our own short sightedness and our craving for unearned merit, convenient services and worst of all easy credit and Get-Rich-Quick Schemes ! We, Consumers of the World hereby pledge that we will SEEK, Practice and Teach, Sustainable Productivity and Just Values of Living, knowing full well - a disease in One Part of the World can become a Global Pandemic; A poor Community in One Part of The world is Just a Cog in the Wheel for Manipulation, Corruption and Deception World-Wide, A dishonest man in authority or seat of Power can trigger A World-Wide Catastrophe and Climate Change, global warming and environmental pollution subtly puts a toxic load on our health that no Health care Policy can help !" Visit:


How do you contact the Consumer Financial Protection son has had a most egregious situation that this agency should be aware of and possibly they could help.
Thank you
Bernice Dunn

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on June 17, 2009 9:15 AM.

President Obama official schedule and guidance, June 17, 2009. Granting benefits to gay partners was the previous entry in this blog.

Valerie Jarrett's push for Chicago 2016 Olympics. is the next entry in this blog.

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