Congress Throws Consumers Under The Bus

Obama is dropping the consumer financial protection agency and the Volcker Rule from the bank regulation overhaul bill.

The Obama administration is no longer insisting on the creation of a stand-alone consumer protection agency as a central element of the plan to remake regulation of the financial system.

In hopes of quick congressional approval of a reform bill, White House officials are opening the door to compromise with lawmakers concerned about creating a new bureaucracy, according to congressional and some administration sources.

President Obama's economic team is now open to housing the consumer regulator inside another agency, such as the Treasury Department, though they still prefer a stand-alone agency. In either case, they are insisting on a regulator with political autonomy and real teeth so it can effectively enforce rules designed to protect consumers of mortgages, credit cards and other financial products.

The administration may also have to compromise on Obama's recent proposal for a rule to limit risky activities at banks by prohibiting them from engaging in many kinds of speculative investments.

Treasury officials are preparing to send Capitol Hill a toughly worded measure that would bar banks from making certain investments that benefit only the firms' bottom line rather than their customers. But there is little support among either Democratic or Republican lawmakers for this proposal, known as the "Volcker rule," and Senate leaders are now closing ranks around legislation that would leave it to banking regulators, rather than the law, to decide which activities to ban.

That's staggering.  There's basically no support for either of these measures from Republicans or Democrats in Congress.  Real reform of the banks was always going to be impossible, even after nearly destroying the global economy and costing taxpayers trillions of dollars.  Passing this, for the Democrats, would be a massive boost to their credibility in 2010.

But let's face it:  Congress is owned by the banks.  They freely admit this.  The banks sure as hell do.  No reform for you.  Congress serves the financial industry.

So the next time this happens, we'll take another multi-trillion dollar hit to the economy.  And it will come out of your pocket again.  I find myself starting to agree with this anti-incumbent thing.