Tag Archives: House testimony

Consumer Protection When All Else Fails (Written Testimony)

I took three points away from yesterday’s hearing in the House of Representatives.

  1. We need layers of protection against financial excess.  Think about the financial system as a nuclear power plant, in which you need independent, redundant back-up systems – so if one “super-regulator” fails we don’t incur another 20-40 percentage points in government debt through direct and indirect bailouts.  A consumer financial products protection agency should definitely be part of the package.  Update: The Washington Post reports that such an agency is now in the works; this is a big win for Elizabeth Warren, Brad Miller and others (add appropriate names below).
  2. Congress will work on this.  The intensity of feeling with regard to the need to re-regulate is striking, and there is much that resonates across the political spectrum.
  3. In the end, much of banking is likely to become boring again.  Special interests are convinced that they can fend off the regulatory challenge, but I find this increasingly unlikely.  Enough people have seen through what they did, how they did it, and what they keep on doing.  No doubt the outcomes will be messy and less than optimal, but at this point “less than optimal” is much preferable to “systemic meltdown”.

There is still much to argue about and, no doubt, there will be setbacks.  We’ll get a better or a worse system, depending on how the debate goes.  And if the external scrutiny slips away, so will point #3 above.  But this was still by far the most encouraging hearing I’ve so far attended.

The main points from my written testimony to the subcommittee are below.

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