F6, and the Koch reformers, now also just wanting to reform the reform ..
Context of '1979-1980: Billionaire Libertarians Defeated in Presidential Campaign, Decide to Influence Politics through Organizations'
preemptive action earlier, of course ..
Disrupting the Obama Administration - Since well before the 2008 presidential election, the Koch brothers have been involved in full-throated efforts to derail any policies or initiatives that would be launched by a Democratic president. In January 2008, Charles Koch wrote in the industry newsletter that America was on the verge of “the greatest loss of liberty and prosperity since the 1930s.” The Kochs have used their “astroturf” advocacy group, Americans for Prosperity (AFP), to great effect against the Obama administration, launching its efforts even before the November 2008 election (see October 2008 and January 2009 and After). Conservative activist Grover Norquist says that AFP’s August 2009 anti-health care rallies were instrumental in undermining Obama’s policy initiatives. Norquist says the rallies “discouraged deal-makers,” Republicans who otherwise might have considered cooperating with Obama and Congressional Democrats, and affected corporate donors to Washington lobbyists, steering millions into the hands of Republican lobbyists. [New Yorker, 8/30/2010]
John Nichols July 12, 2011 | This article appeared in the August 1-8, 2011 edition of The Nation.
“Never has the time been so right,” Louisiana State Representative Noble Ellington told conservative legislators gathered in Washington to plan the radical remaking of policies in the states. It was one month after the 2010 midterm elections. Republicans had grabbed 680 legislative seats and secured a power trifecta—control of both legislative chambers and the governorship—in twenty-one states. Ellington was speaking for hundreds of attendees at a “States and Nation Policy Summit,” featuring GOP stars like Texas Governor Rick Perry, former House Speaker Newt Gingrich and House Majority Leader Eric Cantor. Convened by the American Legislative Exchange Council (ALEC)—“the nation’s largest, non-partisan, individual public-private membership association of state legislators,” as the spin-savvy group describes itself—the meeting did not intend to draw up an agenda for the upcoming legislative session. That had already been done by ALEC’s elite task forces of lawmakers and corporate representatives. The new legislators were there to grab their weapons: carefully crafted model bills seeking to impose a one-size-fits-all agenda on the states.
Founded in 1973 by Paul Weyrich and other conservative activists frustrated by recent electoral setbacks, ALEC is a critical arm of the right-wing network of policy shops that, with infusions of corporate cash, has evolved to shape American politics. Inspired by Milton Friedman’s call for conservatives to “develop alternatives to existing policies [and] keep them alive and available,” ALEC’s model legislation reflects long-term goals: downsizing government, removing regulations on corporations and making it harder to hold the economically and politically powerful to account. Corporate donors retain veto power over the language, which is developed by the secretive task forces. The task forces cover issues from education to health policy. ALEC’s priorities for the 2011 session included bills to privatize education, break unions, deregulate major industries, pass voter ID laws and more. In states across the country they succeeded, with stacks of new laws signed by GOP governors like Ohio’s John Kasich and Wisconsin’s Scott Walker, both ALEC alums.
The details of ALEC’s model bills have been available only to the group’s 2,000 legislative and 300 corporate members. But thanks to a leak to Aliya Rahman, an Ohio-based activist who helped organize protests at ALEC’s Spring Task Force meeting in Cincinnati, The Nation has obtained more than 800 documents representing decades of model legislation. Teaming up with the Center for Media and Democracy, The Nation asked policy experts to analyze this never-before-seen archive.
The articles that follow are the first products of that examination. They provide an inside view of the priorities of ALEC’s corporate board and billionaire benefactors (including Tea Party funders Charles and David Koch). “Dozens of corporations are investing millions of dollars a year to write business-friendly legislation that is being made into law in statehouses coast to coast, with no regard for the public interest,” says Bob Edgar of Common Cause. “This is proof positive of the depth and scope of the corporate reach into our democratic processes.” The full archive of ALEC documents is available at a new website, alecexposed.org [ http://www.alecexposed.org/wiki/ALEC_Exposed (and see http://www.prwatch.org/news/2011/07/10883/about-alec-exposed )], thanks to the Center for Media and Democracy, which has provided powerful tools for progressives to turn this knowledge into power. The data tell us that the time has come to refocus on the battle to loosen the grip of corporate America and renew democracy in the states.
Wendell Potter July 12, 2011 | This article appeared in the August 1-8, 2011 edition of The Nation.
Days after President Obama signed the Affordable Care Act into law, I arrived at the spring 2010 meeting of the National Association of Insurance Commissioners (NAIC) in Denver, where a fellow consumer representative introduced me to one of the hundreds of industry lobbyists swarming the convention center. “She’s somebody we can work with,” he said, clearly convinced that she would deal with us in good faith, even if we might disagree on certain policy issues. Over the next several months, other consumer reps agreed that she really did seem to want to do what was right for patients, even if the organization that paid her salary often seemed to care more about profits than people.
I was skeptical. I knew from my two decades as an insurance company executive that the industry often conducts duplicitous charm offensives, assuring the public that insurers support consumer-focused reform while executives work surreptitiously to block any reform that might curtail profits. So I was not shocked when I found out that Joan Gardner, executive director of state services for the Blue Cross and Blue Shield Association’s Office of Policy and Representation, had been keeping something important from us. As a leading member of ALEC’s Health and Human Services Task Force, she’d been helping write legislation designed to ensure that any healthcare reform implemented at the state level would benefit insurance companies far more than their policyholders. She was also leading an effort to recruit more dues-paying members to ALEC.
I learned of Gardner’s clandestine work when a reform advocate alerted me to a story about a resolution her ALEC committee had drafted in 2008 to forbid “government-mandated health care.” Apparently fearful that a bill would reach Obama’s desk that would allow states to establish single-payer systems, ALEC crafted the Freedom of Choice in Health Care Act, which, despite its Orwellian name, was written to deny the citizens of any state that passed it the freedom to set up such a system. By declaring that Congressional attempts to regulate health insurance at the federal level would be unconstitutional, it would effectively ban not only a federal single-payer proposal but also a federally created health insurance exchange and a federally operated public insurance option. ALEC has boasted that some forty-four states have introduced its Freedom of Choice in Health Care Act (which itself would not withstand a constitutional challenge). What it hasn’t acknowledged is that attempts to pass healthcare-nullification bills have failed in at least twenty-five states. Only eight states have passed the act so far.
Reviewing ALEC’s healthcare-related bills and resolutions from the past few years makes it clear that insurers realized early on that the best way to block the profit-threatening provisions of any federal reform would be to attack them at the state level through ALEC. With Democrats in control of both houses of Congress and the White House in 2009, insurers assumed some kind of healthcare reform was inevitable, so they adopted a strategy to shape rather than stop reform. Its top five goals became:
§ Keeping single-payer proposals off the table;
§ Ensuring that the final bill contain a clause requiring all Americans not eligible for an existing federal program to buy coverage from a private insurance company;
§ Preventing the new law from establishing a government-run plan (the “public option”) that would compete with private insurers;
§ Making sure that the reform law is implemented primarily at the state level, to keep the federal government from assuming any significant new oversight of private insurers’ business practices; and
§ Keeping any new regulations and consumer protections to a minimum.
Insurers achieved their first four goals, with ALEC playing a key role in a well-coordinated effort to keep the most progressive proposals from being enacted at the state or federal level. Where it fell short was in blocking provisions of the law that will impose more rigorous oversight of insurance companies’ business practices. After Obama signed the bill into law, the industry turned its attention to influencing how the new regulations would be written (by the NAIC and federal bureaucrats) and how the law would be implemented in the states.
As its archive reveals, ALEC has been at work for more than a decade on what amounts to a comprehensive wish list for insurers: from turning over the Medicare and Medicaid programs to them—assuring them a vast new stream of revenue—to letting insurers continue marketing substandard yet highly profitable policies while giving them protection from litigation. Republican lawmakers continue to promote model bills from the 1990s. Some of the most far-reaching and industry-favorable measures adopted by ALEC over the years:
§ The Resolution Urging Congress to Create Private Financing of the Medicare Program, initially adopted in 1998, calls on Congress to privatize Medicare by permitting the creation of Individual Medical Accounts, similar to Health Savings Accounts that accompany high-deductible health plans and that have become attractive tax shelters for well-to-do Americans. Individual Medical Accounts, along with vouchers, are a feature of Representative Paul Ryan’s federal proposal to privatize Medicare.
§ The Resolution on Medicaid Funding Through a Federal Block Grant, adopted in 2008, urges Congress to replace the current financing mechanism for Medicaid with block grants, as Ryan proposes. In another proposal to privatize the program, the Access to Medicaid Act, beneficiaries would receive vouchers to buy insurance policies in the private market.
§ The Health Care Choice Act for States, adopted in 2007, would permit the sale of individual health insurance policies across state lines, which would not be subject to the mandated benefits required by in-state policies. The effect would be to make comprehensive policies significantly more expensive than they already are. (Wyoming was the first state to enact this model bill, in 2010, followed by Georgia and Maine this year.)
§ The Non-Economic Damage Awards Act, adopted in 2002, would limit medical malpractice awards for damages like pain and suffering to $250,000, making such lawsuits infeasible. (Few lawyers would be willing to represent patients if the total award were limited to that amount because they probably would not be able to cover their costs.) Insurers and the American Medical Association have joined forces in lobbying for such tort reform.
In sum, ALEC’s model legislation would not only undermine the consumer protections in the Affordable Care Act; it would shred the social safety net for the most vulnerable among us: older, disabled and poorer Americans, and those who become victims of a system that is supposed to heal, not harm.
Lisa Graves July 12, 2011 | This article appeared in the August 1-8, 2011 edition of The Nation.
Hundreds of ALEC’s model bills and resolutions bear traces of Koch DNA: raw ideas that were once at the fringes but that have been carved into “mainstream” policy through the wealth and will of Charles and David Koch. Of all the Kochs’ investments in right-wing organizations, ALEC provides some of the best returns: it gives the Kochs a way to make their brand of free-market fundamentalism legally binding.
No one knows how much the Kochs have given ALEC in total, but the amount likely exceeds $1 million—not including a half-million loaned to ALEC when the group was floundering. ALEC gave the Kochs its Adam Smith Free Enterprise Award, and Koch Industries has been one of the select members of ALEC’s corporate board for almost twenty years. The company’s top lobbyist was once ALEC’s chairman. As a result, the Kochs have shaped legislation touching every state in the country. Like ideological venture capitalists, the Kochs have used ALEC as a way to invest in radical ideas and fertilize them with tons of cash.
Take environmental protections. The Kochs have a penchant for paying their way out of serious violations and coming out ahead. Helped by Koch Industries’ lobbying efforts, one of the first measures George W. Bush signed into law as governor of Texas was an ALEC model bill giving corporations immunity from penalties if they tell regulators about their own violation of environmental rules. Dozens of other ALEC bills would limit environmental regulations or litigation in ways that would benefit Koch.
ALEC’s model legislation reflects parts of the Kochs’ agenda that have little to do with oil profits. Long before ALEC started pushing taxpayer-subsidized school vouchers, for example, the Koch fortune was already underwriting attacks on public education. David Koch helped inject the idea of privatizing public schools into the national debate as a candidate for vice president in 1980. A cornerstone of the Libertarian Party platform, which he bankrolled, was the call for “educational tax credits to encourage alternatives to public education,” a plan to the right of Ronald Reagan. Several pieces of ALEC’s model legislation echo this plan.
The Kochs’ mistrust of public education can be traced to their father, Fred, who ranted and raved that the National Education Association was a communist group and public-school books were filled with “communist propaganda,” paranoia that extended to all unions, President Eisenhower and the “pro-communist” Supreme Court. Such redbaiting might be ancient history if fifty years later David were not calling President Obama a “hard-core socialist” who is “scary.”
The Kochs have not just multiplied the wealth of their dad; they’ve repackaged and amplified his worldview. David’s latest venture, Americans for Prosperity, subsidizes the Tea Party movement, which repeats this “socialist” smear. Charles is a member of the exclusive Mount Pelerin Society, inspired by Frederic von Hayek’s antisocialist polemic The Road to Serfdom. Through the Charles G. Koch Charitable Foundation, the Institute for Humane Studies administers the Hayek Fund for Scholars and sister programs to fund academics and staffers for like-minded groups across the country. “Charles G. Koch Fellows” and interns stock ALEC, and have gone on to direct ALEC task forces.
Another David Koch project, Citizens for a Sound Economy—which launched the effort to repeal Glass-Steagall protections keeping banks from gambling in securities—helped fuel the fight for “free trade,” an unpopular policy in the 1980s. The North American Free Trade Agreement passed with help from CSE and its corporate allies. ALEC resolutions for state legislators have long supported such trade agreements in the face of local concerns about job losses, and today the Koch free-market fantasy is reflected in ALEC’s support for free trade pacts with Korea, Georgia, Colombia and other countries. On just about every issue taken on by Koch’s CSE, ALEC has provided legislative tools to carry them through to state legislatures, from privatizing “federal and state services and assets,” as CSE put it, to blocking common-sense caps on unlimited credit card interest rates.
ALEC and the Kochs often pursue parallel tracks. Just as ALEC “educates” legislators, Koch funding has helped “tutor” hundreds of judges with all-expenses-paid junkets at fancy resorts, where they learn about the “free market” impact of their rulings. But ALEC also operates like an arm of the Koch agenda, circulating bills that make their vision of the world concrete. For a mere $25,000 a year, Koch Industries sits as an “equal” board member with state legislators, influencing bills that serve as a wish list for its financial or ideological interests.
It’s a pittance for the Kochs but far out of the reach of working Americans. Ordinary citizens rely on our elected representatives’ efforts to restore what’s left of the American Dream. But through ALEC, billionaire industrialists are purchasing a version that seems like a real nightmare for most Americans.
John Nichols July 12, 2011 | This article appeared in the August 1-8, 2011 edition of The Nation.
In the heat of Wisconsin’s brutal battle over Governor Scott Walker’s assaults on unions, local democracy, public education and social services, one of his closest allies suddenly shifted direction. State Representative Robin Vos, Republican co-chair of the powerful Legislative Joint Finance Committee, determined that making it harder for college students, seniors and low-income citizens to vote was an immediate legislative priority, and pressed lawmakers to focus on enacting one of the most restrictive voter ID laws in the nation.
As ALEC’s chair for Wisconsin, Vos was doing what was expected of him. Enacting burdensome photo ID or proof of citizenship requirements has long been an ALEC priority. ALEC and its sponsors have an enduring mission to pass laws that would make it harder for millions of Americans to vote, impose barriers to direct democracy and let big money flow more freely into campaigns.
Republicans have argued for years that “voter fraud” (rather than unpopular policies) costs the party election victories. A key member of the Corporate Executive Committee for ALEC’s Public Safety and Elections Task Force is Sean Parnell, president of the Center for Competitive Politics, which began highlighting voter ID efforts in 2006, shortly after Karl Rove encouraged conservatives to take up voter fraud as an issue. Kansas Republican Kris Kobach, who along with ALEC itself helped draft Arizona’s anti-immigration law, has warned of “illegally registered aliens.” ALEC’s magazine, Inside ALEC, featured a cover story titled “Preventing Election Fraud” following Obama’s election. Shortly afterward, in the summer of 2009, the Public Safety and Elections Task Force adopted voter ID model legislation. And when midterm elections put Republicans in charge of both chambers of the legislature in twenty-six states (up from fifteen), GOP legislators began moving bills resembling ALEC’s model.
At least thirty-three states have introduced voter ID laws this year. In addition to Wisconsin, Alabama, Kansas, South Carolina and Tennessee have passed similar bills. Only a veto by Democratic Governor John Lynch prevented New Hampshire from enacting a law the Republican House speaker admitted was advanced to make it harder for “liberal” students to cast ballots, and that one state representative described as “directly attributable to ALEC.”
ALEC’s goal is to influence not just state politics but also the 2012 presidential race, to “give the electoral edge to their preferred candidates,” as Cristina Francisco McGuire of the Progressive States Network pointed out in March. “It’s no coincidence that they are waging the fiercest of these battles in states that are also the likeliest battleground states in 2012, where suppressing the youth vote could have a dramatic impact,” she wrote. The one class of voters that ALEC seeks to protect with resolutions and model legislation—overseas military voters—happens to be likely to vote Republican.
Beyond barriers to voting, ALEC is also committed to building barriers to direct democracy. Horrified by the success of living-wage referendums and other projects that have allowed voters to enact protections for workers and regulations for businesses, ALEC’s corporate sponsors have pushed to toughen the rules for voter initiatives. “The legislative process should be the principal policy-making vehicle for developing state law,” declares one 2006 resolution, which specifically mentions concerns about state minimum wage laws, taxation and “the funding of other government programs and services.” ALEC’s Resolution to Reform the Ballot Initiatives Process recommends making it harder to qualify referendum language and suggests that proposals on fiscal issues should require supermajorities to become law.
ALEC is also determined to ensure that citizens do not have the final say on who is elected president, an agenda outlined in such documents as its Resolution in Support of the Electoral College and its ardent opposition to the National Popular Vote project (which it has warned would “nationalize elections and unravel Federalism”). A related resolution encourages state legislatures to formally complain that an interstate compact to defer to the popular will “would allow a candidate with a plurality—however small—to become President.” While ALEC worries about the candidate with the most votes winning, it has no problem with policies that increase the likelihood that the candidate with the most money and corporate support will prevail. Its 2009 Resolution Supporting Citizen Involvement in Elections bluntly “opposes all efforts to limit [citizen] involvement by limiting campaign contributions.” A resolution approved last year expresses support for the Supreme Court’s Citizens United ruling. ALEC even opposes moves to give shareholders a say in the expenditure of corporate funds on campaigning. At the same time, ALEC urges legislators to fight the “federal takeover” of state election procedures, objecting in particular to universal standards for voting procedures.
Of course, ALEC is not opposed to uniformity in election procedures as such. It just wants the rules to be set by CEOs, campaign donors and conservative legislators. Restricting voting and direct democracy while ensuring that corporations can spend freely on campaigning makes advancing the conservative agenda a whole lot easier. “Once they set the rules for elections and campaigns,” says Wisconsin State Representative Mark Pocan, a longtime ALEC critic, “ALEC will pretty much call the shots.”
Rachel Maddow describes how Republican tactics to discourage (or prevent) likely Democratic voters from voting damages American democracy; and that's only the beginning!
Right wing aims to chill opposition with intimidation
The Rachel Maddow Show [video] April 5, 2011
Rachel Maddow shares the explanation offered by the Mackinac Center for why it requested the e-mails of Michigan professors who mentioned "Maddow" and calls out the Center for not only being dishonest but for trying to intimidate their political opposition.
Rachel Maddow traces the path of corporate money from the extremely rich Koch brothers through Republican governors and corporate-backed get-out-the-vote efforts to aid in the election of more Republicans.
Obama vows fight with pick for consumer agency chief
* Republican calls for more transparency for confirmation
* Obama says "army of lobbyists" fighting financial reform
* Warren may be a candidate for U.S. Senate
By Jeff Mason Mon Jul 18, 2011 3:37pm EDT
WASHINGTON, July 18 (Reuters) - President Barack Obama warned the financial industry on Monday to stop fighting his administration's reforms to help consumers as he officially announced his pick to head a U.S. financial watchdog agency.
Obama chose a compromise candidate to lead the new Consumer Financial Protection Bureau: former Ohio attorney general Richard Cordray, who is not as recognizable as Wall Street critic Elizabeth Warren but who has his own reputation as a consumer advocate.
Cordray's nomination is expected to face tough resistance in the U.S. Senate, as Senate Republican leader Mitch McConnell said his party will demand "serious reforms" to the new agency before considering any nominee to head it.
Republicans have focused their attacks on the structure of the agency, created by last year's so-called Dodd-Frank financial reform law. They say it has virtually unchecked power and could restrict banks' ability to lend.
Republicans also are likely to target Cordray's record of suing financial institutions including Bank of America (BAC.N) and his strong language condemning bank practices.
Focusing on mortgage lending malpractice, Cordray has referred to the U.S. housing boom that helped cause a deep recession as a "Roman orgy" of debt.
Obama, during a White House ceremony to mark Cordray's nomination on Monday, said that there is "an army of lobbyists and lawyers" trying to water down the provisions of financial reform that his administration passed.
"They've already spent tens of millions of dollars this year to try to weaken the laws that are designed to protect consumers, and they've got allies in Congress who are trying to undo the progress that we've made," Obama said.
"We're not going to let that happen," he added. "I will fight any efforts to repeal or undermine the important changes that we passed."
Warren, who helped set up the agency and would have faced a tough if not impossible confirmation battle to head it, stood at Obama's side along with Cordray during the ceremony. Some politicians in Massachusetts think Democrats may recruit her to run against Republican U.S. Senator Scott Brown in 2012.
'ACCOUNTABILITY AND TRANSPARENCY'
Obama's fellow Democrats control the Senate, but Republicans could use a procedural move to block a confirmation vote.
McConnell said on the Senate floor that Republicans will not back off their demands for structural changes at the agency.
Republicans have demanded that the agency's leadership be changed to a board instead of a single director, the agency's budget be subject to congressional approval, and other financial regulators have a greater say in the agency's oversight of banks.
"We'll insist on serious reforms to bring accountability and transparency to the agency before we consider any nominee to run it," McConnell said.
White House spokesman Jay Carney said the Senate should and would confirm Cordray.
The agency will open its doors on Thursday, the one-year anniversary of Obama's signing of the Dodd-Frank financial oversight law.
The U.S. Chamber of Commerce, a business lobby group, said Cordray would have too much power in his new job.
"The CFPB's structure makes its director one of the most unaccountable officials Washington has ever seen," David Hirschmann, president and CEO of the Chamber's Center for Capital Markets Competitiveness, said in a statement.
"The director is the only Senate-confirmed position at this new federal agency, putting unprecedented powers to regulate a large part of our economy in the hands of a single individual with virtually no checks and balances."
Obama said his reforms would make it easier for consumers to get protection from abusive practices by credit card companies and mortgage lenders.
"For years the job of protecting consumers was divided up in a lot of different agencies," he said.
"We changed that. We cut the bureaucracy and put one consumer watchdog in charge with just one job: looking out for regular people in the financial system."
(Additional reporting by Richard Cowan, Caren Bohan, Patricia Zengerle and Steve Holland; Editing by Will Dunham)
Obama Vows Fight Over Efforts to Weaken Dodd-Frank
U.S. President Barack Obama is followed by Elizabeth Warren, the Harvard professor appointed last fall by Obama to set up the Consumer Financial Protection Bureau, left, and former Ohio Attorney General Richard Cordray, as Obama arrives in the Rose Garden to announce the nomination of Cordray to head the new bureau in Washington, D.C., U.S. Photographer: Joshua Roberts/Bloomberg
By Carter Dougherty - Jul 18, 2011 6:32 PM CT
President Barack Obama said he would push back against Republican attempts to alter the Dodd-Frank regulatory overhaul, in particular the Consumer Financial Protection Bureau.
“I will fight any efforts to repeal or undermine the important changes that we passed,” Obama said today in remarks at the White House after nominating former Ohio Attorney General Richard Cordray to be the agency’s first director. “We are going to stand up this bureau and make sure it is doing the right thing for middle-class families.”
Senate Minority Leader Mitch McConnell of Kentucky and 43 other Republicans announced in May that they wouldn’t vote to confirm anyone as director until changes were made to its structure, a message he repeated today. Under procedural rules in the 100-member Senate, the Republicans could block any vote.
“Senate Republicans still aren’t interested in approving anyone to the position until the president agrees to make this massive new government bureaucracy more accountable and transparent to the American people,” McConnell said in a statement.
The bureau, which was set up by Harvard professor and Obama adviser Elizabeth Warren, is scheduled to start work on July 21. In a posting on the White House blog, Warren criticized “trillion-dollar banks” and Republicans who oppose or want to revamp the agency.
“This agency still has enemies in Washington,” Warren wrote. “And they have a plan.”
Possible Senate Bid
Warren, who didn’t rule out running for the U.S. Senate as a Democrat in November 2012, will return to Harvard later this year.
“That’ll be the time to think about my future,” Warren said today in an interview on Bloomberg Television’s “Bottom Line” program.
Jay Carney, the White House spokesman, said the administration would fight efforts to weaken the agency.
“We believe that Mr. Cordray is the right person for the job and will push that forward,” Carney said today at a news conference.
Consumer advocates including Robert Weissman, president of Public Citizen, back Cordray even as they express disappointment that Warren didn’t get the job.
Obama “succumbed to Wall Street” in bypassing Warren, Weissman said in an interview.
“We are going to strongly support Cordray, and we want the White House to push hard for his confirmation,” Weissman said. “If the Republicans indicate they will block confirmation, we want to see a recess appointment.”
‘Deep Concerns’
David Hirschmann, who heads the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce, said the business group has “deep concerns” about how Cordray would wield the bureau’s powers.
“We will need to understand where Mr. Cordray stands on these issues,” Hirschmann said in a statement.
Under the Dodd-Frank law enacted last year, the consumer bureau on July 21 will assume authorities under pre-existing laws, including the Truth in Lending Act. It doesn’t inherit other powers such as the ability to supervise non-bank financial firms, including payday lenders and mortgage originators, until a director is in place.
Full Powers
Senator Tim Johnson, a South Dakota Democrat and chairman of the Banking Committee, said yesterday in a statement that he will move the nomination “as quickly as possible” so that the bureau can assume its full powers.
Senator Rob Portman, who was among the Republicans to sign the May letter, didn’t rule out voting to confirm Cordray, a fellow Ohioan.
“Rich Cordray is a dedicated public servant and I will look forward to hearing his views, including on how the CFPB can be made more accountable,” Portman said in a statement yesterday. “As I have said since its inception, I have serious concerns about this new federal bureaucracy.”
Calls to the office of Senator Scott Brown, one of two Republicans who didn’t sign the letter, weren’t returned. Brown, of Massachusetts, would be Warren’s opponent if she decides to run for Senate next year and wins the Democratic nomination.
To contact the reporter on this story: Carter Dougherty in Washington at cdougherty6@bloomberg.net. To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.
As Ohio’s attorney general during the fallout from the financial crisis, Mr. Cordray undertook a series of prominent lawsuits against big names in the finance world. And in late 2010, after narrowly losing re-election, he came to Washington to spearhead the bureau’s enforcement efforts.
Wall Street was largely silent about the news on Sunday, with few financial trade groups willing to say anything much publicly about the nominee.
“We look forward to a productive opportunity to engage with the new leadership of the C.F.P.B.,” said David H. Stevens, president and chief executive of the Mortgage Bankers Association.
But behind closed doors, some industry officials questioned whether life under Mr. Cordray would be any easier than if Mr. Obama had tapped the consumer advocate Elizabeth Warren to lead the bureau. While Ms. Warren conducted a lengthy charm campaign [ http://dealbook.nytimes.com/2011/03/30/warren-courts-her-top-critics/ ] that led her to meet with bankers from every state and subdue some criticism, Mr. Cordray has been deciding which types of enforcement cases to pursue against the industry.
Here is a look at some of the most prominent cases that made Mr. Cordray, as Ohio’s attorney general, the Midwestern sheriff of Wall Street.
CREDIT RATING AGENCIES
While federal officials issued reports chiding the nation’s top credit rating agencies, Mr. Cordray took them to court. He sued the firms [ http://www.nytimes.com/2009/11/21/business/21ratings.html ], alleging that they not only awarded top grades to troubled mortgage-backed securities but that they also were “intimately involved in structuring” the investments. The products, according to Mr. Cordray, caused retirement funds for police officers and teachers to lose hundreds of millions of dollars.
“The rating agencies’ total disregard for the life’s work of ordinary Ohioans caused the collapse of our housing and credit markets and is at the heart of what’s wrong with Wall Street today,” he said at the time.
“It’s now becoming clear that fraud, deception and an utter disregard for accuracy are in part to blame for the national foreclosure disaster,” Mr. Cordray said at the time.
Status: Pending
A.I.G.
One of Mr. Cordray’s biggest wins [ https://www.opers.org/News/2009/12.shtml ] came against the American International Group and its former top executives, whom he accused of accounting fraud. He secured a settlement of about $700 million from the giant insurer and a $115 million deal with its former chief executive, Maurice R. Greenberg.
Elizabeth Warren, assistant to the President and special advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, talks with Rachel Maddow about the new nomination of a director of the Consumer Financial Protection Bureau and the Republican opposition that prevented her from being able to take that job.
Fed Said to Draft Rules for Biggest U.S. Banks Following Basel Standards
By Craig Torres and Cheyenne Hopkins - Aug 11, 2011 8:31 AM CT
Federal Reserve officials are drawing up rules for the largest U.S. banks that won’t be more stringent than global capital standards agreed to in Basel, Switzerland, according to a person familiar with the discussions.
Federal Reserve Governor Daniel Tarullo cited a “goal of congruence” between the Basel standards and the Fed’s work on rules under the Dodd-Frank Act, which overhauls banking regulation, in a June 3 speech. The central bank hasn’t veered from that, according to the person, who declined to be identified because the rules are still being drafted.
The Basel Committee on Banking Supervision, which includes regulators from the U.S. and Europe, set an additional capital buffer standard for the largest international banks in June that will range from 1 percentage point to 2.5 percentage points of risk-weighted assets. That comes on top of a requirement of 7 percent of common equity for all banks.
“I have always thought it was very important to try to preserve the level playing field for internationally active banks, and those are the key terms in Basel,” said Ernest Patrikis, partner at law firm White & Case LLC and a former general counsel at the Federal Reserve Bank of New York. “There will be a sigh of relief” among bank executives that the Fed is staying within the Basel framework, he said.
Largest Banks
Regulators worldwide are trying to curb the risk the largest banks pose to taxpayers and the financial system. The rule-making comes as bank stocks worldwide have plunged on forecasts for lower economic growth. Higher capital levels could have crimped bank returns even more, posing greater risk to a flagging U.S. recovery.
“Higher and higher levels of capital mean less lending, risking a policy error given the fragility of the economic recovery,” said John Dearie, executive vice president for policy at the Financial Services Forum, a Washington-based organization whose members include Goldman Sachs Group Inc. and JPMorgan Chase & Co. Capital requirements “determine how much banks can lend.”
A draft of the Fed’s rule-making on a section of the Dodd- Frank Act that calls for “enhanced prudential standards” for banks with $50 billion or more in assets should be finished by the end of September, according to the central bank. The rules will also apply to nonbank financial firms that regulators determine pose systemic risk. The rule proposal will also cover liquidity requirements, credit exposure limits and risk management standards for the biggest U.S. banks.
‘High Enough’
Richard Spillenkothen, a former director of banking and supervision for the Fed, said the capital standards are “high enough to be credible.” He said the central bank still has latitude to go even further later.
“U.S. regulators retain the authority to require any individual U.S. global bank to operate with capital above the Basel surcharge levels based on the bank’s unique circumstances and risks -- which is to say that the proposed Basel surcharges remain minimum systemic risk add-ons,” he said in an e-mail yesterday. “This is an important tool that regulators should not be afraid to use.”
Bank Stocks Drop
The KBW Bank Index (BKX), which tracks shares of 24 banks including Citigroup Inc., Bank of America Corp., and Wells Fargo & Co., is down 30 percent this year, compared with an 11 percent decline in the Standard and Poor’s 500 Index. The Bloomberg Europe 500 Banks and Financial Services Index is down 29 percent.
The rout in banks stocks is risky because financial institutions could pull back on lending as they try to curb risks and protect returns. Fed officials attempted to support the economy this week by pledging to keep the benchmark lending rate in a range of zero to 0.25 percent, where it has been since December 2008, for at least the next two years.
Simon Johnson, the former chief economist at the International Monetary Fund who is now a professor at Massachusetts Institute of Technology, said Fed officials may be missing an opportunity to force banks to hold even more capital against losses.
“They certainly should have higher capital requirements for systemically important financial institutions,” he said. “This week is going badly in the markets partly because one or more global megabanks is under pressure -- precisely because their buffers against losses are so low.”
To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Cheyenne Hopkins at chopkins@bloomberg.net; To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
News 
Market Data 
Discover 
AI
