Banks Still Buying Congress – But Here's What We Can Do
On Friday, the New York Times ran this article about the banks’ successful defeat of judicial mortgage modifications in Congress. The article is aptly titled “Ailing, Banks Still Field Strong Lobby at Capitol,” and I’d highly recommend reading it in full.
It discusses the tried-and-true combination which led to the banks’ win over homeowners: politicians, lobbyists, and money. For example, two of the twelve Democrats who voted against the measure are from banking industry states. Senator Carper, from DE, raised $375,000 from the industry this election cycle, and Senator Johnson, from SD, raised $280,000. With so much money flooding the system, the Democrats couldn’t keep their troops in line on the bankruptcy vote, while the Republicans successfully made sure all their members voted against the measure. The final vote was 51-45.
As the Times puts it, “There was no counterweight to that legislative muscle. Bankrupt homeowners do not have a political action committee or lobbyists.”
Of course, the point of AFFIL and other consumer advocates is to substitute as a sort of PAC for consumers. We don’t have the money the banks have, but we do have public opinion on our side. There’s tons of outrage over what the banks have done to the economy; it’s a matter of pulling everyone together to make sure Congress gets the message and does right by consumers.
This strategy can work – for example, it worked on credit cards. One result of the unified and organized outrage over credit card practices (60,000 people sent comments to the Fed last summer, and then countless consumers contacted Congress this spring) was that the Obama Administration got involved in the credit card issue. They did not get involved in the battle over allowing judicial mortgage modifications, determining that it wasn’t “worth” a scathing battle with the industry. I’m sure the 1.7 million homeowners whose homes were at stake would disagree with that assessment, however.
There are huge battles coming down the pike over whether the banks should be allowed to continue self-regulating, or whether there should be meaningful consumer protections in place. We need the Administration to fight for consumers, and we need Congress to hear loudly from us to counter all that bank money and lobbyist noise.
Or else, as the Times puts it, “even as the industry struggles financially and suffers from its role in the economic crisis… in the coming legislative battles that will shape the future of the economy, the financial industry — through a powerful and well-financed lobbying force — may have a far stronger hand to play than might seem evident.”
(Photo: Steve Rhodes)