Yesterday, the Obama administration announced that, as part of its regulatory reform package, it wants to create a new consumer protection agency, charged with overseeing financial products on the ground level. The banking lobby and the Chamber of Commerce both made their opposition to the new agency known, and in the last day have found another strong ally in CNBC.
A host of CNBC talking heads — from Dennis Kneale and Joe Watkins to Larry Kudlow — said that the new agency is actually meant to advance an insidious liberal plot to force banks into making loans to poor people that can’t pay them back. And anyway, the very notion of consumer protection is unnecessary because only “stupid,” “naive,” “suckers” and “idiots” wound up with a subprime mortgage or unfair credit card contract. Watch a compilation:
Nevermind that this whole premise of CNBC’s attack is based on the crackpot conservative theory that forced lending to the poor and minorities, mandated by the Community Reinvestment Act (CRA), caused the economic crisis. This response shows, yet again, how out of touch CNBC is with the real world.
Just this month, Wells Fargo was accused of spending a decade “systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages.” Loan officers actually pushed customers who would have qualified for a prime loan into a subprime. Employees reportedly referred to blacks as “mud people” and to the loans they were offering as “ghetto loans.” As Professor Elizabeth Warren said, “all these lousy mortgages got sold, one family at a time. These were crummy mortgages, like selling plastic spoons that have carcinogens in them or toys that put out little children’s eyes.”
And it wasn’t just in mortgages that predatory lending occurred. Credit cards, particularly those marketed to young people, had all sorts of hidden fees, with rates that could be raised at any time, for any reason, causing boatloads of debt.
The point of the new agency is to keep an eye on financial products on the ground, which is an area traditional regulators have ignored, with severe implications. And yes, the new agency will be responsible for enforcing fair lending laws and the CRA, which as Federal Reserve Board Governor Randall S. Kroszner said, have “been helpful in alleviating the financial isolation of many areas of concentrated poverty.” CNBC’s wholesale dismissal of all of this is a pretty blatant example of what the network really cares about.