Will Banks Be Held Accountable to Communities?

RaceWire at 10:46 am
May 3, 2010

Will Banks Be Held Accountable to Communities? [VIDEO]

Cross-posted from RaceWire

By Kai Wright

Last week, Senate Democrats managed to get their financial reform bill past the Republican blockade. Floor debate on the bill, which would create a consumer protection bureau inside the Federal Reserve, will move forward this week and the Senate’s more progressive Dems are expected to push amendments to make it tougher. They’re emboldened by the renewed outrage that the SEC’s charges against Goldman Sachs has stirred and Delaware Sen. Ted Kaufman says he’ll press to have the six largest banks broken up, which is a step the Obama administration opposes.

But there’s little public talk about toughening the bill’s consumer protections. On Thursday, housing and labor advocates organized thousands to march on Wall Street as a reminder of why that’s important — because banks’ shoddy, often predatory lending in working communities, particularly Black and Latino ones, was the fuel for the fire that eventually engulfed our economy. ColorLines took a camera down to the march to hear what protestors had to say to the banks about that fact (watch the video above—and pass it on!).

Advocates have broadly pushed a consumer protection agency. But the devil will be in the details.

The Senate bill creates a bureau inside the Fed that has it’s own budget, a presidentially appointed director and broad rule-writing and enforcing authority. Nonetheless, the bill gives veto power to an oversight board stacked with the same bank regulators who have already proven unwilling to protect consumers. Meanwhile, the House version creates a fully independent agency, but it carves out significant areas of lending from the agency’s oversight. Car dealers, who originate a massive volume of loans in Black communities, are exempt in the House bill and lobbyists are working hard to carve them out of the Senate bill as well.

The coming debate will focus largely on the “too big to fail” questions — if mega-banks need to be broken up and how public funds should be used to prevent their collapse. But the question of how consumers are protected within the financial system is equally crucial. We’ll see if that discussion gets back on the table as well.