"It is truly a historic day," Sen. Elizabeth Warren said Tuesday after the Senate agreed to allow a vote on Richard Cordray to head the Consumer Financial Protection Bureau (CFPB), the consumer watchdog agency that Warren devised and helped get on its feet. "It took nearly two years, but…now the American people will have a strong watchdog in Washington," Warren continued in a conference call with reporters. "David beat Goliath."
On Tuesday evening, the Senate confirmed Cordray by a vote of 66 to 34 after Republicans agreed not to filibuster his confirmation. The vote came after Republicans spent years trying to block Cordray's appointment and attacking the CFPB in court.
The CFPB has already accomplished much to benefit consumers—forcing credit card companies to refund nearly half a billion dollars they juked consumers out of, implementing new rules to make mortgages safer, and creating a center that fields consumer complaints about shady dealings by financial institutions. But without a director confirmed by the Senate, the agency's powers were limited. Now that Cordray has been confirmed, the CFPB is fully legitimate, Warren says. "There are no more clouds. Period. This locks all the pieces in place," she told reporters Tuesday.
It was a long struggle. Senate Republicans filibustered Cordray when Obama first nominated him to head the agency in July 2011. In response, Obama used a recess appointment—a presidential appointment that happens while the Senate is on vacation and does not require Senate approval—to install Cordray in January 2012. Republicans then sued to challenge the constitutionality of Cordray's appointment. Senate Republicans intended to filibuster Cordray again this time around, demanding fundamental changes that would weaken the CFPB before they'd allow a vote. Harry Reid, the Democratic Senate majority leader, threatened to change the rules of the Senate to block the GOP filibuster. But late Tuesday, the Senate devised a truce to avert the Republicans' filibuster—and Reid's rule change.
The agency was devised by Warren after the financial crisis, who pointed out at the time that it was "impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street." The agency came to life as part of the 2010 Dodd-Frank financial reform act, and Warren has aggressively campaigned for Cordray's confirmation ever since.
But Warren is not worried. "They can introduce whatever [legislation] they want. The political stalemate is over," she told reporters, adding that any Supreme Court ruling would have few implications since Cordray now has the Senate's official approval. As she said in a statement after the Tuesday vote, "The consumer agency is the law of the land and is here to stay."
The CFPB—Warren's brainchild—was created as part of the 2010 Dodd-Frank financial reform act and is charged with protecting Americans from shady dealings on the part of banks, credit unions, payday lenders, mortgage-servicing companies, and debt collectors. Ever since its inception, Republicans have been doing all they can to kneecap the agency, whichthey say "wield[s] nearly unprecedented powers" over Wall Street, as 43 GOP senators wrote in a February letter to the president. Senate Republicans filibustered Cordray after Obama first nominated him to head the CFPB in July 2011. This prompted the president to recess-appoint Cordray six months later (meaning Obama appointed him without Senate approval while they were on recess), which then spurred Republicans to file a lawsuit challenging the constitutionality of Cordray's appointment. (The Supreme Court will review the case in the fall.)
Cordray's recess appointment term is up at the end of the year, and Republicans are again vowing to filibuster his re-nomination, unless Democrats allow key changes to the CFPB, such as forcing the agency to be subject to the congressional appropriations process so Congress can revoke its funding, and allowing other regulatory agencies to veto CFPB actions, which Democrats have refused to allow.
"I know that some Republicans and lobbyists think that this filibuster on Rich's appointment can shut down the work of the agency," Warren said Monday on the Senate floor. "They think it can shut down the agency, and protect the big banks from any meaningful consumer protection rules."
Democrats are so fed up with GOP obstruction of Obama's nominees that Senate majority leader Harry Reid (D-Nev.) is threatening to change Senate rules on executive branch nominations like Cordray's to allow simple majority of 51 senators to approve nominees instead of the usual 67 needed for to overcome a filibuster.
Warren is down with this idea. "Outside the halls of this Congress and the fancy lobbyist offices across Washington... no onethinks it's ok to cheat regular people and cut special deals for giant banks," she said. "And no one wants to take the cops off the beat so big banks can break the rules without being held accountable."
There are a mere 80 days left until one of the main components of Obamacare goes into effect. The health insurance exchanges—where uninsured Americans will be able to buy health coverage with federal subsidies—open up for business on October 1. Naysayers are predicting delays and confusion. And not without reason. According to a June survey, 79 percent of Americans haven't heard of the exchanges. (Forty-two percent are still unsure if Obamacare is even law.) GOPers spreading misinformation about the law have outspent proponents by a factor of five. The administration is altering provisions of the law as it unfolds, even as Congress blocks efforts to improve it. Needless to say, the Obama administration has some work to do in the next couple of months to convince the American public that it is up to the task of signing up millions of people for coverage over the next year. As part of that effort, the White House held a press briefing with liberal reporters on Friday to advertise the fact that, despite all the gloom and doom, those insurance exchanges are ready to go, and darnit, people are going to like them. Here's how that will work, according to several senior administration officials:
First of all, it's no big thing: The insurance exchange roll-out has been portrayed as a gargantuan task, requiring the Department of Health and Human Services to coordinate 50 separate exchanges, and craft an entirely new online marketplace. But the administration insists the infrastructure for signing all these people up already exists: more people signed up for Medicare part D under President Bush II than will ever enroll in the exchanges. And out of the 30 million uninsured Americans, only 15.4 million will be purchasing coverage on the individual market through the exchanges. Out of these people, the officials say, the administration really only needs to worry about signing up a good proportion of young and healthy folks—or 2.7 million 18 to 35 year-olds—so premiums won't be too expensive.
Micro-targeting will win again: This target group is mostly male, mostly minority, and mostly concentrated in urban areas, according to Census data. In order to sign up these Americans, the administration is deploying the same kinds of micro-targeting techniques it relied on during the re-election campaign—advertising through radio, social media, churches, community health centers, and retailers. Every Walgreens will distribute info on the healthcare law. The administration has also been working with women's networks and magazines, like Cosmo, to promote Obamacare.
The application process won't be terrible: The administration has already set up healthcare.gov, where uninsured people will be able to apply for and buy insurance. The application was recently cut down from 23 pages to 3, and, officials say, you won't have to fill out any annoying questions about your migraines or your paternal grandmother's history of heart disease that private companies use to jack up rates. Once you fill out the online app, you'll find out if you're eligible for Medicaid, or whether you should buy through the marketplace, and, if so, whether you're eligible for a subsidy.
Those states that are not expanding Medicaidmight come around: Obamacare broadened Medicaid eligibility to all people within 138 percent of the poverty line, but last year, the Supreme Court made that part of the law optional, and so far 17 states have refused to expand the program. Poor people filling out apps in states that are not expanding Medicaid will still be directed to the state Medicaid office, who will then have to inform the uninsured person that the state will not provide her insurance because the governor (or state legislature) decided he didn't want to. Administration officials are hopeful that public dismay at this kind of in-your-face rejection—along with pressure from mayors nationwide who are fans of the expansion—could lead recalcitrant states to change their minds.
On Thursday, the House finally passed the farm bill, which provides funding for agriculture and nutrition programs—but only after Republicans stripped out all provisions concerning the $80 billion-a-year food stamp program.
The massive, five-year farm bill failed to pass the House in late June because conservative Republicans thought that the bill's envisioned cuts to the food stamp program ($21 billion over 10 years) wasn't enough, and Democrats thought it was far too much. The GOP devised a plan to pick up more votes by dividing the legislation, aiming to give the farm provisions a better chance of passage by splitting them from the controversial food stamp provisions. Meanwhile, GOP leaders hoped to garner more conservative votes for the nutrition bill by turning it into a vehicle to make further cuts to food stamps.
So far, their plan is working. The farm bill sans food stamps passed on a party-line vote of 216 to 208, with only 12 Republicans voting against. (Next, Republicans will draft up a separate food stamp bill.)
The President of New York City's Food Bank, Margarette Purvis, slammed the split bill as an attack on the needy, saying it would leave "the fates of 47 million Americans in limbo. This is a sad statement of the priorities of the leadership of this House of Representatives," she continued. "We need Congress to pass a farm bill that reduces hunger, not one that puts billions of meals at risk for the most vulnerable among us—especially when need remains so high."
Rep. Rosa DeLauro (D-Conn.) echoed this Thursday. "A vote for this bill is a vote to end nutrition in America," she said.
Sen. Elizabeth Warren (D-Mass.) and a bipartisan group of senators introduced a bill Thursday that would break up the nation's biggest banks, forcing them to split their routine commercial banking operations from their risky trading activities.
The 1933 Glass-Steagall Act, which Congress passed in response to the 1929 financial crash, separated traditional commercial banks—which hold Americans' checking and savings accounts and are backed by taxpayer money—from investment banks, which make riskier bets. But in 1999, the Gramm-Leach-Bliley Act—which was backed by the Clinton administration—gutted this law. A bonanza of bank mergers ensued, and the size of these new behemoths, such as Citigroup, JP Morgan Chase, and Bank of America, made their downfalls more threatening to the overall US economy. Their too-big-to-fail size justified the government bailouts they received during the last financial crisis. The senators behind this new bill—a group that includes John McCain (R-Ariz.), Maria Cantwell (D-Wash.), and Angus King (I-Maine)—refer to their legislation as the 21st Century Glass-Steagall Act because it would reinstate a firewall between normal banking functions and casino-like finance. By cutting the big banks down to size, the bill would reduce the potential impact of a bank failure on the wider economy and decrease the size of future bailouts.
"Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world," McCain said in a statement. "Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits."
There was pressure to resurrect Glass-Steagall after the 2008 financial crisis, but the final 2010 Dodd-Frank financial reform law did not include such a provision. Dodd-Frank aimed to address the too-big-to-fail problem by forcing Wall Street to limit its risk-taking. These senators maintain that's not sufficient.
"Congress must take additional steps to see that American taxpayers aren't again faced with having to bail out big Wall Street institutions while Main Street suffers," King said.
This bill, if passed and enacted into law, would not fully remove the the threat of too-big-to-fail. None of the institutions that failed in 2008, such as Lehman Brothers and American International Group, were commercial banks. "But, it would rebuild the wall between commercial and investment banking that was in place for over 60 years," McCain said, "restore confidence in the system, and reduce risk for the American taxpayer."