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On Wednesday June 17, 2009 the President announced a “sweeping overhaul” of financial rules ostensibly to combat regulatory failures.  These include a proposal for a Consumer Financial Protection Agency.  But by Sunday, June 21, columnist Frank Rich wrote in the New York Times “last week’s big rollout of [President Obama’s] financial reform package was a big punt, an accommodation given to the status quo.”

The details are few, but one thing is likely:  the government’s “reform” is not going to stop consumer fleecing without outside forces to push on whatever new regulatory powers the new agency acquires.  To date, the “Change We Can Believe In” as far as financial regulations go, appears to be warmed over Clintonian personnel who, while Goldman Sachs proposes the largest bonuses in its history, take notes from Robert Rubin, and propose “bailouts out with bonuses,” under the guise of the sanctity of employment contracts. 

Meanwhile the financial industry reserves for itself the privilege to change consumers’ credit card or banking contracts/mortgage agreements unilaterally and charge consumers usurious rates, whether or not they qualify for credit.  Check the fine print for the details.  At least President Obama has appropriately raised the profile of the problem with fine print, calling the contracts “ridiculous” “with pages of fine print that no one can figure out…”

After Congress gets a chance to weigh in and the new Consumer Financial Protection Agency takes shape, we will undoubtedly still need an independent, federally chartered, nonprofit organization devoted to protecting consumers in the financial arena.  In short, Citizen Works proposes a nongovernmental Financial Consumer Association to be run by membership-elected people, and not financed by the corporations they are supposed to monitor or a government often conflicted from massive infusions of campaign contributions from those flush lobbying industries (some $5 billion over the last decade). 

Let’s wait to see how the details unfold but the parameters articulated thus far look more like tinkering at the edges than the titanic corporate reforms required.

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