October 8, 2024

President Obama’s Budget Revives Benefits as Divisive Issue

In the midterm races already taking shape, Democrats who back Mr. Obama’s budget proposals to trim future benefits as part of a long-term deficit-reduction compromise could be attacked from the left and the right.

Liberal groups and some union activists are threatening to recruit candidates to challenge these Democrats in their primaries. At the same time, the head of the House Republicans’ campaign committee gleefully signaled last week that he would use Mr. Obama’s “shocking attack on seniors” against Democrats in general-election races — though Republican Congressional leaders demanded the concessions from Mr. Obama. And while party leaders rebuked the campaign committee chief, Representative Greg Walden of Oregon, individual Republican candidates and “super PACs” would be free to wage their own attacks.

For now, at least, the political warnings to Democrats are coming mostly from the left of their own party.

“You cannot be a good Democrat and cut Social Security,” said Arshad Hasan, the executive director of Democracy for America, a liberal grass-roots group, which staged a small protest outside the White House last week even before Mr. Obama released his annual budget on Wednesday.

“People would be looking to punish them,” said Robert Borosage, a co-founder of the Campaign for America’s Future, another liberal group, “and they would be looking for primary challengers.”

Even if Democratic incumbents do not draw a primary challenger, liberal activists say, they might face a shortage of volunteers motivated enough to do the hard work of campaigning — just as Democrats did in the 2010 midterms, which resulted in big Republican gains.

Looking further ahead, to 2016, some on the left have already begun talking about encouraging a liberal Democrat — the freshman Senator Elizabeth Warren of Massachusetts is the name most bandied — to take up the “don’t touch Social Security or Medicare” banner as part of a liberal bid for the party’s nomination to succeed Mr. Obama, even against Hillary Rodham Clinton or Vice President Joseph R. Biden Jr.

Such talk was stoked when Ms. Warren, within hours of the release of the president’s budget on Wednesday, sent supporters an e-mail sounding an alarm: “Our Social Security system is critical to protecting middle-class families, and we cannot allow it to be dismantled inch by inch.”

She was not available for an interview, aides said on Friday.

“If the major candidates running for the Democratic nomination hedge on important issues like Social Security, they will leave open a tremendous amount of space for an insurgent,” said Adam Green, a co-founder of the Progressive Change Campaign Committee, a group often critical of Mr. Obama.

But, Mr. Green acknowledged, “I wouldn’t say anybody’s laying the groundwork yet.”

At a minimum, Mr. Borosage said, all Democratic candidates in 2014 or 2016 “will be forced to take a stand.”

That prospect could complicate the campaign strategies of establishment favorites. Mr. Biden is inevitably tied to Mr. Obama’s policies. And Mrs. Clinton, as a senator, was a fiscal moderate who extolled her husband’s budget-balancing record of compromise. President Bill Clinton negotiated Medicare savings with Congressional Republicans, and their 1997 deal nearly included the same proposal trimming Social Security cost-of-living increases that Mr. Obama has put in his budget to entice Republicans to compromise in turn.

Ideological litmus tests have lately been more divisive for Republicans than for Democrats, over taxes and social issues like abortion, same-sex marriage and immigration. But the agitation on the left to defend Social Security and Medicare, the two programs that Democrats consider perhaps their party’s greatest legacy, did not begin last week with Mr. Obama’s new budget.

It had been building since mid-2011, when the president, in private negotiations with Speaker John A. Boehner, tentatively agreed to the new formula for calculating cost-of-living adjustments in Social Security; economists recommend the formula as more accurate, but it would mean smaller increases for Social Security beneficiaries. Even so, Democrats in Congress and the White House agree that the party would have supported Mr. Obama back then if a compromise deal had come to a vote.

But the 2011 talks, just like a second round of negotiations in December, collapsed after Mr. Boehner declined to agree to Mr. Obama’s counterdemands: new taxes on the wealthy and on some corporations, and job-creating investments in infrastructure projects, research and education.

Sarah Wheaton contributed reporting.

Article source: http://www.nytimes.com/2013/04/14/us/politics/president-obamas-budget-revives-benefits-as-divisive-issue.html?partner=rss&emc=rss

Media Decoder Blog: Scott Brown Becomes a Fox News Contributor

Fox News on Wednesday added the former Republican Senator Scott Brown to its contributor ranks, two weeks after Mr. Brown decided against another run for a Senate seat in Massachusetts.

Mr. Brown will make his debut as a paid pundit on Wednesday night’s edition of “Hannity,” the channel’s 9 p.m. program. “I am looking forward to commenting on the issues of the day and challenging our elected officials to put our country’s needs first instead of their own partisan interests,” Mr. Brown said in a statement.

Politico reported last week that Mr. Brown was in talks with the network. His hiring is the latest in a series of contributor changes Fox has made this winter; last month the network renewed Karl Rove’s contract and parted ways with Sarah Palin and earlier this month it declined to renew Dick Morris’s contract.

Mr. Brown became something of a hero to Republicans in 2010 when he won a special election for the seat formerly held by Edward M. Kennedy, thereby becoming the first Republican senator to represent Massachusetts since 1972. But his time in the Senate was brief: he lost to a Democrat, Elizabeth Warren, last November.

Another Senate seat in the state opened up when John Kerry was nominated to be secretary of state, but on Feb. 1 Mr. Brown said he would not seek that seat.

He could instead seek the Massachusetts governorship in 2014, but for now he’ll appear pretty much exclusively on Fox, a powerful platform for anyone in the Republican party.

It’s not exactly a parallel, but on Tuesday, Fox’s competitor on the left, MSNBC, added a contributor to its ranks as well: Robert Gibbs, the former White House press secretary and a close confidant of President Obama’s. Mr. Gibbs will be a paid pundit for both MSNBC and its parent network NBC.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/13/scott-brown-becomes-a-fox-news-contributor/?partner=rss&emc=rss

DealBook: Doubt Is Cast on Consultants Hired to Fix Banks’ Abuses

Furniture is removed from a foreclosed house in Richmond, Calif.Justin Sullivan/Getty ImagesFurniture is removed from a foreclosed house in Richmond, Calif.

Federal authorities are scrutinizing private consultants hired to clean up financial misdeeds like money laundering and foreclosure abuses, taking aim at an industry that is paid billions of dollars by the same banks it is expected to police.

The consultants operate with scant supervision and produce mixed results, according to government documents and interviews with prosecutors and regulators. In one case, the consulting firms enabled the wrongdoing. The deficiencies, officials say, can leave consumers vulnerable and allow tainted money to flow through the financial system.

“How can you be independent if you’re hired by the entity you’re reviewing?” Senator Jack Reed, Democrat of Rhode Island, who sits on the Senate Banking Committee, said.

The pitfalls were exposed last month when federal regulators halted a broad effort to help millions of homeowners in foreclosure. The regulators reached an $8.5 billion settlement with banks, scuttling a flawed foreclosure review run by eight consulting firms. In the end, borrowers hurt by shoddy practices are likely to receive less money than they deserve, regulators said.

On Thursday, Senator Elizabeth Warren, Democrat of Massachusetts, and Representative Elijah Cummings, Democrat of Maryland, announced that they would open an investigation into the foreclosure review, seeking “additional information about the scope of the harms found.”

Critics concede that regulators have little choice but to hire outsiders for certain responsibilities after they find problems at the banks. The government does not have the resources to ensure that banks follow the rules. Still, consultants like Deloitte Touche and the Promontory Financial Group can add to regulators’ headaches, the government documents and interviews indicate. Some banks that work with consultants continue to run afoul of the law. At other times, consultants underestimate the extent of the misdeeds or facilitate them, preventing regulators from holding institutions accountable.

Now, regulators and lawmakers are rethinking their relationship with the consultants. Officials at the Federal Reserve, which oversees many large banks, are questioning the prudence of relying on consultants so heavily, said two people with direct knowledge of the matter.

When the Office of the Comptroller of the Currency penalized JPMorgan Chase last month for breakdowns in money-laundering controls, it imposed stricter requirements, ordering the bank to hire a consultant with “specialized experience” in money laundering and to ensure that the firm “not be subject to any conflict of interest.” In a separate action against the bank related to a $6 billion trading loss last year, the agency opted not to mandate an outside consultant at all.

While the comptroller’s office will continue requiring consultants in certain cases, some agency officials are worried about the quality of the work, as well as the consultants’ independence, according to three government officials briefed on the matter.

Since the financial crisis, regulators have increasingly relied on consultants. The comptroller’s office ordered banks to hire consultants in more than 130 enforcement actions since 2008, or nearly 15 percent of the cases.

It can be a lucrative business. In 2011, regulators mandated that 14 banks employ consultants to determine whether homeowners were wrongfully evicted. Over 14 months, the consultants collected about $2 billion in fees, according to regulators and bank officials.

Those fees amounted to more than half of what homeowners will receive under the $8.5 billion settlement that ended the review. As part of the deal, officials will disburse $3.3 billion to 3.8 million borrowers in foreclosure.

According to consultants and regulators, the broad review was plagued with inefficiencies. For example, Promontory initially instructed employees to calculate lawyers’ fees for each loan, to assess if borrowers were overcharged. Later, it scrapped the original procedure, only to reverse the policy again two weeks later, according to two reviewers who worked for Promontory.

“From Day 1, Promontory strove to conduct its review work as thoroughly and independently as possible,” a spokesman for the firm, Christopher Winans, said in a statement. “Our overarching concern at all times was to serve the best interests of borrowers.”

Some lawmakers question whether a consultant’s regulatory connections helped it secure contracts. PricewaterhouseCoopers, which has a stable of former Securities and Exchange Commission officials, won much of the foreclosure review work, signing deals with four banks, including Citigroup. Promontory, the firm examining loans for Wells Fargo, Bank of America and PNC, was founded in 2000 by the former head of the comptroller’s office, Eugene A. Ludwig.

When the contracts were initially awarded, some housing advocates complained that consulting firms could not objectively evaluate banks with which they had pre-existing business relationships. The comptroller’s office said it vetted the firms to spot such potential conflicts, and argued that the process provided swifter relief for homeowners than if the government had hired the companies directly through a lengthy contracting process.

But concerns persisted. Deloitte, which won the contract to review JPMorgan’s loans, had previously audited Washington Mutual and Bear Stearns, two firms JPMorgan acquired during the financial crisis. In May, the comptroller’s office replaced Allonhill, the consultant for Aurora Bank, after the firm disclosed that it had already reviewed some “of the same pool of loans” as part of an earlier contract.

“It’s clear from the foreclosure settlement that oversight over consultants was inadequate and the review process was deeply flawed,” said Representative Carolyn B. Maloney, Democrat of New York, who recently pressed regulators to detail how consultants were paid. People close to the review say consultants relied on a process that the comptroller’s office designed in 2011, under previous leadership.

“This was a very complex process,” a spokesman for the comptroller said. “Throughout the process, regulators provided continuous oversight, guidance and were available to discuss issues.” The agency also performs spot checks on the consultants.

Still, the foreclosure review highlighted broader concerns about the role consultants play.

Since the financial crisis, the comptroller’s office has issued nearly 20 enforcement actions against banks that had already hired consultants to help iron out problems, according to government documents. While consultants cannot be expected to remedy every last issue at the banks, the actions raise questions about the effectiveness of their work.

When HSBC, the British bank, was sanctioned in 2003 over porous money-laundering controls, the bank turned to Deloitte to review its compliance, an official briefed on the matter said. Deloitte also worked for HSBC from 2006 to 2008, the person said, building a system to monitor money flows more effectively. But the bank ran into trouble in 2010 over similar issues, as highlighted in a recent scathing report by the Senate’s Permanent Subcommittee on Investigations.

As part of a regulatory order, HSBC again hired Deloitte, this time to assess the number of times the bank failed to report suspicious transactions. Deloitte, three officials said, generously bundled hundreds of missed transfers into a single report. That helped save the bank from some government fines.

Despite the undercounting, HSBC still paid a record $1.9 billion last year to settle accusations that it enabled drug cartels to move money through its American subsidiaries.

In a statement, a spokesman for the firm said, “Deloitte fully stands behind the quality and integrity of its work on behalf of regulatory authorities.”

Deloitte has also been suspected of helping institutions cloak illicit transfers of money to rogue nations around the globe. In August, New York’s top banking regulator, Benjamin M. Lawsky, accused Deloitte of helping the British bank Standard Chartered flout American sanctions.

The consulting firm was hired to flag suspicious transfers routed through Standard Chartered’s New York branches. Instead, it instructed bankers on how to escape regulatory scrutiny, according to state court documents.

Deloitte turned over “highly confidential information” from which the bank gleaned insight into “regulators’ concerns and strategies,” the court documents said. The firm later doctored its report to regulators, Mr. Lawsky said, deliberately removing some illegal transfers on behalf of Iranian clients. In an e-mail, a Deloitte partner admitted that a report on the transactions was a “watered-down version.”

The authorities never took legal action against Deloitte, and federal officials noted in a separate settlement agreement that Standard Chartered employees withheld critical information from the consulting firm.

Despite these concerns, regulators are turning to a familiar source to help Standard Chartered. As part of a $327 million settlement last year, the bank is required to hire “an independent consultant.”

Article source: http://dealbook.nytimes.com/2013/01/31/doubt-is-cast-on-firms-hired-to-help-banks/?partner=rss&emc=rss

Appointment Clears Way for Consumer Financial Agency

The recess appointment of Richard Cordray on Wednesday as director of the consumer bureau finally gives the fledgling agency the legal standing to supervise those types of financial enterprises, something it has lacked since the bureau was created with the signing of the Dodd-Frank financial regulation act in July 2010.

Although the Dodd-Frank law authorized the consumer agency to regulate the so-called nonbank financial companies, which previously had little supervision, the law was purposely written such that the bureau could not invoke its powers until it had a director.

The bureau had taken responsibility for existing regulations on consumer products at banks and thrifts, it was not able to write new regulations for banking products like mortgages and credit cards until it had a permanent leader.

“Now, with a director, the C.F.P.B. can exercise its full authorities — with respect to both banks and nonbanks — to help those markets operate fairly, transparently, and competitively,” Mr. Cordray, a former Ohio attorney general, said in a blog post Wednesday on the bureau’s Web site.

Most of the nonbank financial companies, he said, “had no regular federal oversight in the run up to the financial crisis. They led a race to the bottom that pushed aside responsible businesses, including community banks and credit unions, and greatly harmed consumers.”

Mr. Cordray was appointed as the enforcement director for the consumer bureau by Elizabeth Warren, who served as a special adviser to President Obama for overseeing the startup of the agency. Though Ms. Warren conceived the bureau, championed it in Congress and was the president’s pick to get it running, she never had the agency’s full powers because she was never formally nominated by the president and confirmed by the Senate.

The bureau has begun some duties like a banking supervision program by placing regulators at many of the nation’s largest banks to review mortgage lending and consumer banking fees.

The consumer bureau director also can influence banking policy as a member of the board of the Federal Deposit Insurance Corporation, which itself is awaiting Senate confirmation of three presidential nominees to its board.

The consumer bureau focuses on “unfair, deceptive or abusive” acts or practices in products like private education loans and prepaid charge cards and at companies like mortgage servicers, which have come under harsh criticism for their foreclosure practices since the housing bubble burst.

Payday lenders, the target of much of the criticism directed at nonbank financial companies, said Wednesday that they would work with the consumer bureau. D. Lynn DeVault, chairwoman of the Community Financial Services Association of America, a trade group for payday lenders, said that more than 19 million Americans have used the companies for short-term loans, which she said were simple, transparent and well understood by consumers.

The Obama administration has not always agreed. It said last month that short-term payday loans can carry interest rates of more than 400 percent, if measured on an annual rate, and fees are not always clearly disclosed.

Consumer advocacy organizations hailed Mr. Cordray’s appointment. “The C.F.P.B. will no longer have to fight mounting consumer financial abuses with one arm tied behind its back,” said Travis B. Plunkett, legislative director for the Consumer Federation of America.

But some banking and business organizations objected. The American Banking Association, which represents banks of all sizes but generally is considered the voice of the largest institutions, said the appointment “puts the bureau’s future actions in constitutional jeopardy, threatening its work, complicating compliance efforts of banks and further undermining the entity’s authority and credibility.”

Many community banks and credit unions have been eager to see the agency up and running because they often compete against nonbank mortgage lenders and other loan companies.

Thomas J. Donohue, president of the U.S. Chamber of Commerce, said its members “strongly believe it’s important to protect consumers from predatory lending, financial scams and fraud in the marketplace.” But he cited the agency’s structure and lack of oversight as its main problems.

The consumer bureau is housed within the Federal Reserve but was given the power to determine its own budget, without Congressional appropriation. The law provides the agency with a budget of up to 11 percent of the Fed’s total 2009 operating expenses, or up to $406 million this year.

Senate opponents want the director replaced with a five-member board similar to those of other regulatory agencies and have refused to consider voting on any nominee until the structure is changed. Currently, any rules that the director puts in place can be overturned only by a vote of two-thirds of the Financial Stability Oversight Council, a 10-member board created by Dodd-Frank law to monitor the financial system.

Article source: http://feeds.nytimes.com/click.phdo?i=8a92f69d76da97003ea9fde833206260

Heaven Is a Place Called Elizabeth Warren

Warren has been something of a left-wing idol for a couple of years now. While heading Congressional oversight of TARP, she more than anyone asked tough questions about what, exactly, was done with all that bank bailout money. And on her subsequent mission to create the Consumer Financial Protection Bureau — which was designed to enforce long-ignored rules meant to protect consumers entering into everything from credit-card agreements to mortgages — Warren became a regular guest of Bill Maher’s and Jon Stewart’s, and both went weak for the straight-talking professor. Stewart told her he wanted to make out.

But this fall, at exactly the time our economic forecasts started souring again and Barack Obama appeared to be at his most ineffectual, Warren’s entrance into the race for Ted Kennedy’s old seat turned her from a cult-hero crusader into something far bigger. A clip of Warren at a fund-raiser in Andover, Mass., talking about how “there’s nobody in this country who got rich on his own,” reminded liberals that there was someone out there who could still articulate a muscular progovernment worldview. “If more Democrats were able to make the case for the underlying social contract as effectively, our discourse would be vastly less mind-numbing,” wrote Steve Benen in a Washington Monthly article that summed up what many liberals across the country were feeling.

Over its first weeks, Warren’s campaign raised an impressive $3.15 million, about 70 percent of which came from out of state and 96 percent from donors giving $100 or less. That last metric is crucial, because a consumer advocate who recently said, “The people on Wall Street broke this country,” is not likely to enjoy big-ticket backing from the financial sector. By late October, three of her biggest primary challengers had dropped out.

Even though she’s running for the Senate and not for the presidency, the early devotion to Warren recalls the ardor once felt by many for Obama. On its face, this is odd: Warren is not a world-class orator, she is not young or shiny or new, she doesn’t fizz with the promise of American possibility that made the Obama campaign pop. Instead, she’s a mild-mannered Harvard bankruptcy-law professor and a grandmother of three, a member of the older-white-lady demographic (she’s 62) that was written off in 2008 as being the antimatter of hope and change.

And yet, on a deeper level, her popularity makes perfect sense. Embracing Warren as the next “one” is, in part, a way of getting over Obama; she provides an optimistic distraction from the fact that under our current president, too little has changed, for reasons having to do both with the limitations of the political system and the limitations of the man. She makes people forget that estimations of him were too overheated, trust in his powers too fervid. As the feminist philanthropist Barbara Lee told me of Warren, “This moment of disillusion is why people find her so compelling, because she brings forth the best in people and she brings back that excitement.”

At the annual Massachusetts Women’s Political Caucus dinner at the Fairmont Copley Plaza, Warren, who was not part of the night’s program, cruised from table to table before the event, introducing herself to guests and blithely ignoring an M.C.’s request for people to settle down. Slipping out the door as the program began, Warren was swarmed by a trio of college students. There was actual shrieking. When I observed to Warren that she has fangirls, she replied, “I know,” with a self-assuredness that female candidates have often found difficult to convey.

“It makes me feel very responsible,” she said as she watched the young women disappear into the night. “Very excited, but very responsible.”

Among other things, what Warren offers is a reasonable, expert face for the free-floating anger currently on display at Occupy Wall Street and elsewhere. She can get wonky about the economy when she wants to, but what sets her apart is her ability to tell a coherent, populist story about it in a way that other members of her party are either unwilling or unable to do.

Rebecca Traister is a frequent contributor to the magazine and the author of ‘“Big Girls Don’t Cry: The Election That Changed Everything for American Women.”

Editor: Greg Veis

Article source: http://feeds.nytimes.com/click.phdo?i=ad4f8c7ea6de2f3440df330896fe767b

DealBook: Wall Street’s Newest Regulator a Longtime Foe

Richard Cordray, President Obama's choice to lead the new Consumer Financial Protection Bureau.Michael Houghton for The New York TimesRichard Cordray, President Obama’s choice to lead the new Consumer Financial Protection Bureau.

Richard Cordray, President Obama’s pick to lead the new Consumer Financial Protection Bureau, is no stranger to Wall Street.

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 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, 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.

Status: Pending

GMAC

Last fall, Mr. Cordray became one of the first attorneys general to take action in the nationwide investigation of wrongful foreclosures. His target: GMAC Mortgage, the home lending unit of General Motors, a unit of the renamed Ally Financial.

“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 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.

Status: Settled

BANK OF AMERICA AND MERRILL LYNCH

in 2009, Mr. Cordray led a multistate lawsuit against Bank of America concerning its takeover of Merrill Lynch. Mr. Cordray accused the bank of fraudulently concealing Merrill Lynch’s huge losses around the time of the takeover.

“The amount of shareholder value affected here, negatively, is about as great as has been alleged in any case, ever,” Mr. Cordray said at the time.

Status: Pending

Article source: http://feeds.nytimes.com/click.phdo?i=1672b464117725691fc88e96f45e75db

Your Money: Consumer Watchdog Is All Ears for Ideas

The new Consumer Financial Protection Bureau officially opens for business on Thursday, but for several months it has been soliciting ideas from the public.

In response, there was the predictable sniping, with some people taking to Twitter to ask if the bureau can protect people from the increasing federal debt caused by the creation of new agencies.

And there were the plaintive requests from people looking for help far beyond the bureau’s turf in financial services. Someone wondered about gym memberships, while somebody else asked the bureau to give pornography sites their own domain name suffixes.

But in the earliest Twitter posts, which I read end to end in a 140-character binge this week, there were also some thought-provoking ideas with real potential.

They may never come to fruition, if the Republicans succeed in stripping power from the bureau and running Elizabeth Warren — who has been overseeing the bureau but is probably not going to be its official director — out of town.

For now, however, the bureau is for real, and in an avalanche of Twitter messages, e-mails and blog comments on its Web site, consumers have shown a hunger for a financial cop on the beat.

Meanwhile, its openness thus far suggests the tantalizing possibility that it could be the nation’s first open-source regulator. So I picked the four most interesting ideas that people on Twitter suggested and took them to the bureau this week to see just how open it was to provocative suggestions.

SIMPLICITY Perhaps the most reasoned call to action came from Bill Mitchell (Twitter handle: @zipflash), an investment newsletter publisher and soon-to-be hedge fund manager in Irvine, Calif.

“My politics don’t really align with Elizabeth Warren’s,” he said. “But I sensed that she had a legitimate interest in trying to, at a minimum, improve efficiencies.”

So he took his best shot at helping her do that in a couple of Twitter messages. “Create standardized contract for credit cards for issuers to incorporate by reference, merely adjusting specific rates and fees.”

And then: “Limit the total number of words in consumer financial contracts. Disclosures are not transparent if their length is unlimited.”

Mr. Mitchell said he worried that credit card agreements had become like the software and Web agreements that so many people mindlessly speed through.

“We are actively working toward simplifying credit card contracts,” said Gail Hillebrand, associate director of consumer education and engagement for the bureau.

At the moment, the bureau is in the midst of an overhaul of mortgage disclosure forms, something Congress demanded. Congress hasn’t ordered the bureau to revise card agreements, though, and it is not clear how much authority the bureau would have to force card issuers’ hands if it decided to try.

Still, it’s clear that Ms. Warren is a believer in the religion of simplicity. “We are opposed to complicated forms and fine print,” she said Thursday in a hearing before the House Committee on Oversight and Government Reform.

HUMOR Matt Stoller (@matthewstolller), a former Democratic Congressional staff member, just wants a good laugh. “Hold a weekly public complaint essay contest called ‘Why You Should Fine My Bank,’ ” he said in a Twitter post.

In all seriousness, this would have its advantages once the bureau’s novelty wears out, since it would keep consumers coming back looking for the most outrageous sins. Mr. Stoller, in an interview this week, added that the bureau should have a bank-as-hero letter of the week, too, as an incentive for good behavior.

“I think humor and interestingness are not used by government nearly enough,” he said. “To the extent that you do that, you create a situation where if you get a malevolent politician in there trying to kill these programs, then they have to kill something that the public likes.”

The bureau’s Ms. Hillebrand wouldn’t go near the self-preservation angle but got a good chuckle out of Mr. Stoller’s contest notion. “We have to learn from the most effective techniques that people inside and outside of government are using to reach the public,” she said. “If it’s funny, it gets forwarded.”

twitter.com/ronlieber

Article source: http://feeds.nytimes.com/click.phdo?i=08226758e6b359faa041670658aa1661

Consumer Agency Asks for Definitions of Nonbanks

The Dodd-Frank financial regulation law, which became effective last July, specifically allows the new consumer bureau to regulate nonbank mortgage companies, private education lenders and payday lenders. But the law allows the bureau to regulate only “larger participants” in a host of other consumer finance markets.

By July 21, 2012, one year after the bureau’s start-up date, it must define what other services will fall under its jurisdiction and what it means to be a “larger participant” in those markets.

In its notice and request for comment, the bureau has proposed six markets that might be included: debt collection; consumer reporting; consumer credit and related activities; money transmitting, check cashing and related activities; prepaid cards; and debt relief services.

But it also asks for comment on additional service areas that should be included in its jurisdiction, and whether the services need to be national in scope or if regional markets should be considered.

“Consumers deserve the peace of mind that financial companies, both banks and nonbanks, are following the rules,” said Elizabeth Warren, a special adviser to the Treasury secretary who is overseeing the agency’s start-up.

“The C.F.P.B. will be able to examine companies that have never been subject to federal oversight to ensure that no one is gaining an unfair advantage by breaking the law,” Ms. Warren said. “This will ultimately create fair competition, better product offerings and more transparent markets for consumers.”

Although the bureau is scheduled to begin operations next month, it is not allowed to begin oversight of previously unregulated entities until it has a director in place. Ms. Warren has been widely talked about as a potential director but President Obama has not yet nominated anyone to fill the post.

A nomination is subject to Senate confirmation, but 44 Republican senators have said they will not consider any nominee until structural changes are made in the bureau, including replacing its single director with a five-member commission.

Banks, credit unions and savings and loan companies have long been subject to regular examinations by federal regulators to ensure that they comply with consumer financial laws. The Dodd-Frank law expanded federal regulation to a host of financial service companies that previously had not been regulated but that some legislators felt had contributed to the instability that worsened the 2008 financial crisis.

The questions on which the bureau is seeking public input also include what criteria to use to measure a market participant, how to set the threshold for “larger participant,” whether to use a single test for all markets or specific market-related tests and over what time period a participant’s activities should be measured.

Article source: http://feeds.nytimes.com/click.phdo?i=9b22f32d56e09dfadcd636dcf686a89f

DealBook: Warren Courts Her Top Critics

Elizabeth WarrenStephen Crowley/The New York Times In a speech to the Chamber of Commerce on Wednesday, Elizabeth Warren trod lightly on the Consumer Financial Protection Bureau’s plans to regulate Wall Street.

Elizabeth Warren’s charm campaign made a stop in enemy territory on Wednesday.

Ms. Warren, the Obama administration official who is overseeing the new Consumer Financial Protection Bureau, brought her calls for tough regulation to the Chamber of Commerce, a ferocious opponent of regulation – and the bureau itself.

But you wouldn’t know from her remarks that she had stepped into the lion’s den.

Ms. Warren, in a speech to the chamber’s Capital Markets Summit on Wednesday morning, trod lightly on the bureau’s plans to regulate Wall Street. She instead played to her audience, saying the bureau would ease some burdensome regulations.

“The lesson seems clear: Rules should be focused, and those that are not useful should be revised or eliminated,” she said, adding that the bureau would not primarily focus on writing new regulations. Ms. Warren said she even agreed with the chamber’s recent proclamation that the bureau should work to “prevent duplicative and inconsistent regulation of Main Street business.”

That is why, she said, the bureau’s top priority is to “consolidate the duplicative and burdensome” mortgage closing documents.

Ms. Warren’s charm offensive comes as the deadline approaches for President Obama to name an official director of the bureau – a spot that many consumer advocates want her to fill. Ms. Warren’s visit to the chamber — one of the financial industry’s top cheerleaders and lobbying shops — is her latest olive branch to fierce critics who stand in the way of her nabbing the job.

Ms. Warren’s calendar this year has been jam-packed with meetings on Wall Street. She has met with the chief executive of every major Wall Street bank, including Jamie Dimon of JPMorgan Chase, Vikram S. Pandit of Citigroup and James P. Gorman of Morgan Stanley. Her industry outreach included talks with dozens of community bankers, too, and meetings with top credit card executives like Ajay Banga, the president and chief executive of MasterCard.

“I believe in regulatory engagement with industry, and I understand that industry provides a critical perspective in the regulatory process,” she said in the speech.

Ms. Warren also played up her recent hires, which include some familiar faces on Wall Street. The bureau tapped Rajeev Date, a former Deutsche Bank managing director and Capital One Financial senior vice president, to oversee the rule-writing process. Mr. Date, Ms. Warren told the chamber, “has spent almost his entire career working for financial services firms, and he is acutely aware that we need to make sure that any rules we write will enhance the market.”

Ms. Warren also hired Elizabeth Vale, a former Morgan Stanley managing director, a lawyer who has represented the financial industry and a former senior employee at the mortgage-finance giant Freddie Mac.

“We’ve built a structure to make sure that any rules we write will be fact-based and grounded in a deep understanding of the market being regulated,” Ms. Warren said.

Still, playing nice with Wall Street will not be an easy feat for the bureau.

“I’ve been in Washington only a short time, but I have eyes,” Ms. Warren said. “Industry groups have extraordinary resources to push back on oversight and to make their views known, as is their right.”

It also remains to be seen whether Ms. Warren’s efforts will win her the job as the bureau’s director.

When President Obama tapped Ms. Warren, a Harvard law professor, to set up the bureau in September, he stopped short of nominating her to be its first director. The bureau’s director will face Senate confirmation — not a sure bet for Ms. Warren, an outspoken consumer advocate and leading critic of risky lending practices. The bureau will formally open its doors in July, but it is handcuffed from writing several critical rules until it has a director.

Ms. Warren on Wednesday did not comment on her possible nomination, although she did say, “I didn’t come to Washington looking for a job in government.”

Ms. Warren’s appearance comes a year after the chamber led a campaign to sabotage the bureau. The lobbying powerhouse ran a series of fatalistic radio ads warning that the bureau would suffocate small businesses and ultimately hurt consumers.

Those efforts failed. Lawmakers created the bureau as part of the Dodd-Frank Act, the financial regulatory law signed by President Obama in July. The law gave the bureau authority over a wide swath of financial businesses, including payday lenders, mortgage companies and big banks.

Ms. Warren’s prepared remarks acknowledged the awkwardness surrounding her speech. “At the outset, I need to tell you that I’ve had more teasing about this meeting than I’ve had in a long time,” she said. “But then, perhaps, so have you.”

Ms. Warren’s speech on Wednesday will be followed by remarks from a more friendly face for the chamber: Mr. Dimon, of JPMorgan.

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