For months, the Office of the Comptroller of the Currency — led by John “master of disaster” Dugan — has been lobbying against the creation of an independent Consumer Financial Protection Agency (CFPA). The OCC is responsible for regulating nationally chartered banks, and was instrumental in allowing pernicious subprime lending to spread by exempting national banks from predatory lending laws in many states.

Up to this point, the OCC has been parroting the banking industry’s line that an independent CFPA would undermine bank “safety and soundness.” Dugan has been particularly vocal with his opposition, saying that the current consumer protection system “works fine.” He even reacted to Senate Banking Committee Chairman Chris Dodd’s (D-CT) regulatory reform legislation by saying “in every case consumer protection has the edge and will trump safety and soundness and I think that is backwards.”

But today, as Shahien Nasiripour reported, the OCC has abruptly changed positions and now supports creating an independent agency:

The OCC’s position on the proposal has “evolved over time” from one of minimal support with several caveats to one in which they now are “very much in favor of,” deputy comptroller for public affairs Robert M. Garsson told the Huffington Post on Tuesday…“It’s unlikely there will be any meaningful conflicts between safety and soundness and consumer protection,” Garsson said. “The potential for conflicts is very rare.”

With this “evolution,” the OCC is joining the growing consensus among current and former regulators that having a separate consumer protection agency will not undermine bank safety and soundness. “I cannot recall a meeting I sat in where we worried about consumer protection and looked at safety and soundness and said the two are in conflict so how do we solve this,” said Kevin Jacques, a former OCC official. “I would love to see one regulator provide a concrete example where safety and soundness and consumer protection are in conflict and it caused some difficulty. I can’t think of one.”

“In my experience I do not recall seeing a case where a consumer protection regulation was found to pose a threat to safe and sound operations of the banks,” added Brad Sabel, a former New York Federal Reserve Bank official. Of course, even the banks themselves don’t really buy that a CFPA would undermine their soundness. As Elizabeth Warren pointed out yesterday, back in 2006 the banks were arguing that it would be too confusing to combine consumer protection and bank regulation, and that the problem was “best addressed by separating them.”

So why did the OCC flip? Is it the scathing New York Times piece that was published this week? Or was it pressure from the Obama administration, since the OCC is technically a division of Treasury, yet was going around and bashing an administration priority?

Whatever the case, I’m still skeptical that the OCC is really on board with a consumer protection entity that will have enough independence to be effective; it may just be positioning itself to water-down the agency’s power somewhere down the road. But at least the OCC is willing to be one more voice acknowledging that the banks’ main argument against creating the agency is bunk.

Since the Affordable Care Act passed last week, some of the country’s largest companies have complained about a provision that preserves a federal subsidy they receive for providing retirees with prescription drug coverage, but prevents them from deducting the subsidy from their taxes. Republicans and right-wing media have latched on, claiming health care reform is going to hurt American businesses.

Today, Boeing Co. is the latest corporation to complain, announcing that it expects to take a $150 million tax hit because of the new law:

“Boeing will no longer be able to claim an income tax deduction related to prescription drug benefits provided to retirees and reimbursed under the Medicare Part D retiree drug subsidy,” the company stated in a release. “Although this tax increase does not take effect until 2013, accounting standards require that a deferred income tax asset be written down in the period legislation changing the tax law was enacted.”

An association representing 300 of the largest U.S. corporations is pushing for a repeal of the provision that ends the tax break on the government subsidy, something the Wonk Room’s Igor Volsky called “the worst kind” of taxpayer waste and “the most egregious form of corporate welfare.” These companies will still receive their subsidy, but they’ll no longer be able to take the tax deduction as well (so-called “double dipping“).

But Boeing’s complaint further rings hollow because the industry giant is among the largest U.S. companies that pay the least in corporate taxes. Conservatives complain about the high 35 percent U.S. corporate tax rate, but because of corporate welfare such as the prescription drug deduction, Boeing’s tax rate was just 3.2 percent averaged over the last 4 years and just 0.7 percent averaged from 2002 to 2007. And Boeing’s three-year effective tax rate from 2001-2003 was -18.8 percent.

But also, according to Boeing’s 2009 annual report, the company paid no federal income tax in 2009 and actually received $132 million back from the IRS. And in 2008, Boeing paid just $44 million in federal income taxes while netting $2.7 billion in earnings that year.

Therefore, it’s difficult to take Boeing’s whining seriously. After all, if they had any complaints, they could have aired them back in September when the Senate Finance Committee inserted the provision to end the tax break in the health care reform bill. And even then, the measure won approval from many business interests, with the chairman of Business Roundtable saying “it’s very closely aligned to [our] principles.”

In an interview published today with the Wall Street Journal, Sen. Bob Corker (R-TN) — who took the lead on financial regulatory reform negotiations for the Republican side for a few weeks — said that he “absolutely cannot support” the reform bill passed by the Senate Banking Committee last week. “I have no plans to support the current legislation. I hope we’ll get back to the negotiating table,” Corker said.

But interestingly, Corker doesn’t want to actually put his money where his mouth is and take a vote against the bill on the Senate floor:

Democrats have said privately they think it will be hard for some Republicans to vote against new banking rules during an election year. Mr. Corker said he hoped “the administration will not put pressure on the schedule and dare the Senate to vote on the bill.”

Of course, Corker is already on record having voted against this particular bill, since it passed out of committee with zero Republican support. But his plea to keep the bill off the floor until it is sufficiently watered down to garner some GOP support seems to confirm the view of many (including Paul Krugman) that producing a strong bill and forcing Republicans to either support it or show their true colors is precisely what needs to happen.

The GOP — and Corker in particular — have consistently said that they support financial reform and that they expect a bill to be signed into law by the end of the year. Sen. Richard Shelby (R-AL) has even said that his party agrees with 85-90 percent of what Banking Committee Chairman Chris Dodd (D-CT) is trying to do.

However, at the same time, they are actively courting the banking industry and its campaign contributions. In fact, Shelby himself told a crowd of bankers that a good way to prevent an independent Consumer Financial Protection Agency (CFPA) from coming into being is to “elect more Republicans to the U.S. Senate.” “That would help immensely,” Shelby said, while asking the bankers to start with $10,000 contributions to Rep. Roy Blunt’s (R-MO) senate campaign.

The Senate reform bill crafted by Dodd already includes concessions to the GOP, including placing a new consumer protection bureau inside of the Federal Reserve (instead of creating a standalone agency) and more reliance on bankruptcy courts for unwinding failed financial firms (provisions which were crafted by Corker and Sen. Mark Warner (D-VA)). By continually saying that they want to move the bill “back in the middle of the road,” Republicans mean water it down and cut key restrictions needed to rein in the banks.

In the end, the path to getting a good bill may be in doing exactly what Corker is warning against: putting a good product on the floor and daring Republicans to choose between the banks and a secure financial system.

One of the most common arguments employed by the banking industry and conservatives in Congress against the creation of an independent Consumer Financial Protection Agency (CFPA) — which would be empowered to police abuses in consumer lending — is that that it will divorce consumer protection from the “safety and soundness” of banks, unnecessarily undermining the health of the financial system.

“What we don’t want to do is separate out the regulation of the entity from the regulation of the product, which is what the CFPA would do,” Scott Talbott, Senior Vice President for Government Affairs at The Financial Services Roundtable, has said. Creating a CFPA “would actually impair the ability of regulators to monitor the health of our financial institutions and undermine the safety and soundness of our banking system,” added Tom Donohue, president of the Chamber of Commerce.

One of the organizations leading this charge has been the American Bankers Association, which has said that “a more workable approach [to consumer protection] would be to bolster consumer protection and oversight while ensuring that the existing regulatory agencies retain both safety and soundness and consumer protection responsibilities.” But the ABA evidently hasn’t always felt this way.

As Elizabeth Warren, Chairman of the Congressional Oversight Panel for the Troubled Asset Relief Program, pointed out in a Politico op-ed today, the ABA in 2006 was advocating that consumer protection be broken away from bank regulation. Here’s what the ABA has to say regarding proposed guidance on nontraditional mortgage products:

The Guidance combines safety and soundness guidance with consumer protection guidance, creating confusion that is best addressed by separating the them [sic]…ABA is concerned that these apparent changes in supervisory and enforcement policy may arise simply from the Board trying to marry safety and soundness supervision with consumer protection supervision. The result of this marriage of inconvenience between supervision and consumer protection appears to blur long-established jurisdictional lines…[T]he combination of safety and soundness guidance with consumer protection guidance appears to create confusion in the Guidance.

ABA concluded that it “does not believe that the lender’s role is to limit the borrower’s choice of mortgage products or features for which he or she qualifies.” So the ABA explicitly argued that consumer protection is a responsibility is best taken on by an entity other than the bank regulators, adding that combining “safety and soundness” regulation with consumer protection would create confusion! As Warren put it, “this 2006 memo illustrates the ABA’s real consistency — consistent opposition to meaningful reform.”

The argument that consumer protection will undermine bank safety and soundness only holds water if you think that banks have to rip off customers in order to make money. And the ABA’s memo shows that it doesn’t actually believe in its own rhetoric; it’s just resorting to whatever argument will be most convenient in its push to derail financial reform.

Yesterday, the Treasury Department announced that it is preparing to offload part of its share in Citigroup, earning more than $7 billion in profits on taxpayers’ investment in the failed financial behemoth. The fact that the money pumped into Citi will not ultimately result in a loss has led the financial services industry to restart its fight against a bank tax, using the argument that profits from the Troubled Asset Relief Program (TARP) render the tax unnecessary:

‘Large banks are repaying TARP with a profit to the taxpayer – every penny is coming back,’ said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable. ‘The purpose of the bank tax was to ensure the taxpayers are repaid. The repayments with interest by large banks should eliminate the need for any bank tax.’

Talbott’s assertion makes it seem like ensuring that taxpayers make money from TARP is the sole purpose for a bank tax (and to be fair, the Obama administration initially sold the tax this way). But the bank tax is about more than that. It’s also meant to level the playing field between the largest “too big to fail” banks, account for the myriad guarantees that the banks received outside of TARP, and, depending on how it’s designed, build a fund to prevent taxpayer dollars from being tapped to unwind a failing financial firm.

Of course, to make it seem like TARP was the sole rescue program from which the banks benefited is nonsense. As the AP’s Stevenson Jacobs pointed out, “the banks benefited heavily from other subsidies, including the $182 billion bailout of AIG. Tens of billions of that money went to banks that had suffered losses with AIG, and the banks didn’t have to repay a penny.” They were also allowed access to cheap loans via the Fed’s discount window. No policy has been enacted to account for that support.

And nothing about Citi’s repayment fundamentally changes the fact that the bank is considered “too big to fail” and poses a systemic risk to the entire financial system. As Felix Salmon put it, “Citi is still too big to fail, and therefore still has an implicit government guarantee on top of all the explicit guarantees which are still floating around. The government might make a nominal profit on the sale of its stock, but that means effectively ignoring the enormous value of those guarantees to Citi, which is still the shakiest bank in America from a systemic-risk perspective.”

Talbott is essentially arguing that, so long as TARP is repaid in full, things can just go back to the way they were. But financial reform needs to both address the deficiencies that led to the last crisis and build a system that can better withstand the next crisis. The bank tax is a part of that.

The Wall Street Journal reported today that “the U.S. and European governments are moving toward a consensus on taxing large banks to cover the cost of any future bailouts rather than asking taxpayers to foot the bill.” This is welcome news, as various iterations of the bank tax have been kicking around for months — from the Obama administration’s proposal to recoup TARP funds via a bank charge to the $150 billion resolution authority tax included in the House of Representatives’ regulatory reform bill — with nothing officially becoming law.

But now that other countries are starting to voice their support, it looks more and more likely that such a tax will come into being, especially because wider implementation would alleviate the concern that companies would simply pick up and leave if any country were to impose a tax unilaterally. In fact, “officials in the U.S., Europe and the IMF say the bank-tax concept has gained so much momentum that it is likely to be on the agenda when of the Group of 20 industrial and developing nations meet in Canada in June.”

Of course, the banking industry is dead set against any form of bank tax coming into effect. “Global policy makers should be very cautious about advancing any public policy that removes capital from the system — be it in the form of a tax, a fee or otherwise,” said Rob Nichols, president of the Financial Services Forum, which represents the very biggest financial firms. But the real barrier to implementation is conservatives in Congress, who continue to go to bat for the banks, actively selling themselves as defenders of the regulatory status quo.

Remember, Republicans in Congress refused to applaud the bank tax during the State of the Union in January. They’ve taken to mischaracterizing the House’s resolution fund as a “permanent bailout fund,” which even CNBC’s right-wing anchor Larry Kudlow has said is nonsense. Sen. Chuck Grassley (R-IA), the ranking member of the Senate finance committee, even decided to claim victory over a Congressional Budget Office analysis of the tax that essentially confirmed what the tax’s advocates have been saying.

There are plenty of good economic reasons for instituting a bank tax, including leveling the playing field a bit between large and small banks and protecting taxpayers from the cost of the future bank failures. Today, Federal Deposit Insurance Corp. Sheila Bair lent her support to the tax, saying that “it’s really a taxpayer protection fund.” “It will set up a mechanism going forward that doesn’t put the taxpayer at any risk for resolving one of these very large entities if they get in trouble again,” she said. Senate Finance Committee Chairman Max Baucus (D-MT) will reportedly begin hearings on the bank tax next month.

So where will conservatives come down on this? If other countries move ahead with similar plans, the competitiveness argument goes out the window, leaving precious little in the way of opposition that doesn’t amount to straight-up shilling for the very largest financial firms.

Last month, Sen. Jim “tough sh*t” Bunning (R-KY) was joined by a cohort of Republicans in blocking an extension of unemployment benefits. And last week, the GOP decided to put together a sequel, with Sen. Tom Coburn (R-OK) stepping into Bunning’s role. While Bunning was eventually worn down last time, Coburn had enough support for his stand that the Senate adjourned without extending benefits, which means that, for at least one week, some recipients of benefits will see them run out.

That their obstruction is actually going to have a concrete effect has triggered some introspection among Republicans. However, it hasn’t led them to rethink their current position. Instead, as Sen. Jon Kyl (R-AZ) revealed, it’s made them decide that they should have lent more support to Bunning last time around:

“We didn’t give [Bunning] as much help as we probably should have,” Kyl said at a press conference…”I think the sentiment [over the growing deficit] has been there for a long time,” Kyl said. “It took an act of courage like Sen. Bunning’s to perhaps jolt people into the awareness of how bad it had really gotten.“

Kyl added that, while he’s not sure the entire GOP caucus will agree to continue blocking the benefits after Congress returns from recess, “the sentiment will be much stronger going forward than it has been in the past.” Coburn added that people whose benefits run out will actually appreciate the GOP’s obstruction. “Hopefully they’re not going to stay unemployed, and when they’re reemployed, one of two things is going to happen: Either we’re going to cut spending or somebody’s going to raise their taxes,” he said.

Of course, it’s not like support for Bunning was in short supply when he took his stand. Sen. Jim DeMint (R-SC) called him a “national hero,” Sen. Jeff Sessions (R-AL) said that he respected Bunning’s for standing “like a solid rock,” and Sen. John Cornyn (R-TX) added that he admired Bunning’s “courage.”

According to the National Employment Law Project (NELP), one million people will see their benefits expire in April without an extension, while 212,000 are going to lose their benefits over the Congressional recess. “It is unacceptable that Congress has, for a second time, failed to extend the existing federal benefits programs with so many people counting on this assistance. We have been down this road already and seen the turmoil it caused. Congress cannot continue to play games with people’s lives,” said Christine Owens, Executive Director of NELP.

Of course, these numbers may not mean anything to Republicans, since they seem to believe that unemployment benefits create “hobos,” and “turn the ‘safety net’ into a hammock.” Earlier this month, 16 Republican senators from states with double-digit unemployment voted against an extension of unemployment benefits.

This week, Sen. Bob Corker (R-TN) ripped his Republican colleagues for failing to negotiate with Senate Banking Committee Chairman Chris Dodd (D-CT) on financial regulatory reform. Corker said that failure to work with Dodd — and subsequently allowing Dodd’s bill to pass out of committee with no Republican votes — was a “major strategic error.”

“I don’t think people realize that this is an issue that almost every American wants to see passed. There’ll be a lot of pressure on every senator and every House member to pass financial regulation,” he said, adding that “lack of enthusiasm from his colleagues” led to Dodd’s decision to cut off negotiations and proceed with his bill.

The Banking Committee’s ranking member, Sen. Richard Shelby (R-AL), could have taken this criticism to heart. Instead, he fired off a letter to Treasury Secretary Tim Geithner yesterday in which he falsely claimed over and over that Dodd’s bill “institutionalizes ‘too big to fail’“:

While Senate Banking Committee Chairman Dodd’s most recent financial reform bill represents an improvement over the bill you sent to Congress last year, it does not end the problem of “too big to fail” and will not end the associated moral hazard. Also, it does not ensure that taxpayers are protected from the costs of bailing out failing financial institutions...The bill reported out of committee sets up a $50 billion slush fund that, while intended for resolving failed firms, is available for virtually any purpose that the Treasury Secretary sees fit. Nonetheless, the mere existence of this fund will make it all too easy to choose a bailout over bankruptcy.

I could repeat my case here that Dodd’s bill does a pretty adequate job taking care of “too big to fail” banks that are, in fact, failing. But instead, I’ll turn it over to two conservatives: Corker and CNBC’s Larry Kudlow. Corker said that while “some tightening up that needs to take place,” in general “the bill does not enshrine “Too Big To Fail.’” “In general, the concept there is good,” he said. Kudlow added that “I know the language may not be 100%, but the language looks pretty tight to me. The end of too big to fail bailout nation.”

According to a new poll from the Pew Financial Reform Project, 59 percent of Americans “believe Congress and the President need to reform our financial system now.” The poll also showed that “only 18 percent said they would be more likely to reelect their representative if Congress does not take action on financial reform this year, while 40 percent reported that they would be more likely to vote against reelecting their Congress member.”

Dodd’s bill can, of course, be strengthened. But to claim that Dodd doesn’t take steps toward ending “too bil to fail” is to hew to the Frank Luntz financial reform line. It’s a shame that Corker seems to be the only Republican willing to forego that route.

This week, Deputy Treasury Secretary Neal Wolin delivered a speech at the U.S. Chamber of Commerce in which he took the Chamber to task for lying about the effects of financial regulatory reform, and particularly the push to create an independent consumer protection entity within the regulatory structure. As Wolin put it, the Chamber “has launched a lavish, aggressive and misleading campaign to defeat the proposed independent agency”:

Despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it. That campaign is not designed to improve the House and Senate bills. It is designed to defeat them.…We believe that the fight against financial reform is shortsighted and misguided.

CNBC host Larry Kudlow, a disciple of Ronald Reagan who has sworn undying fealty to supply-side economics, also took the Chamber to task this week for its stance on regulatory reform, saying that “the Chamber of Commerce is a very negative force on this. Absolutely negative and absolutely wrong in my humble opinion.”

Having been hammered from left and right, you’d think the Chamber would get the message. However, Thomas Quaadman of the Chamber’s Center for Capital Markets Competitiveness was on C-Span today, fearmongering that the consumer protection agency would regulate department stores and dentists:

If you extend credit, you’re going to fall within the parameters of this agency…Macy’s and Sears, and you know what, in certain circumstances if you have a high dental bill that you need to pay off over the course of time, that dentist could be regulated by that agency. So we don’t think that the dentist, or the butcher, or the florist that extend credit to their customers should be regulated by Washington bureaucrats.

Watch it:

House Republicans used the same tactic during its regulatory reform debate — claiming that the new agency would regulate churches and doctors — and the charge is no more true now than it was then. Both the bill that the House passed last year and the bill that the Senate Banking Committee passed this week contain clear exclusions “for merchants, retailers, and other sellers of non-financial services.”

In fact, the Senate bill explicitly states, on page 1080, that the consumer protection bureau “may not exercise any rulemaking, supervisory, enforcement, or other authority under this title with respect to a merchant, retailer, or seller of nonfinancial goods who extends credit directly to a consumer, in a case in which the good or service being provided is not itself a consumer financial product or service.” So unless the dentist that Quaadman is referencing is hawking credit default swaps between root canals, he has nothing to fear from financial reform. The Chamber is merely continuing to dishonestly whip up opposition to a bill meant to protect consumers from Wall Street excess.

Our guest blogger is Andrew Jakabovics, the Associate Director for Housing and Economics at the Center for American Progress Action Fund.

Today, the Obama Administration will be announcing several new initiatives to bring relief to homeowners struggling to pay their mortgages. But the big news is that the administration has come up with the first systematic set of policies to address the problem of negative equity (homeowners owing more than their home is worth) by bringing mortgages down to the current value of the properties.

An estimated 24 percent of all houses with mortgages are worth less than the remaining balance on those mortgages. By writing down the outstanding loan to bring it in line with the current value of the property, there is an opportunity to create mortgages that are likely to keep paying over the long term and minimize the walkaway risk.

Since the housing crisis began, CAP has argued that the best solution is to restructure mortgages to reflect current property values. Drawing on the experience of history, the new FHA/TARP program announced today fits the bill.

In what is essentially a modern version of the New Deal’s Home Owners’ Loan Corporation, a borrower who is current on her loan but who owes more on her home than it is currently worth can refinance into an FHA loan for 97 percent of the property’s current value. Incentives will be paid to servicers to allow these borrowers to refinance for less than the outstanding amount. Given the much larger losses lienholders would face if borrowers defaulted, cash in hand may be sufficiently attractive to allow these short-refis to proceed.

Even though these refis will be FHA loans in all respects and must qualify on those terms, TARP will be on the hook for future claims, with $14 billion in TARP funds being set aside for this program in a first loss position. As an added benefit, the program will also bolster FHA’s insurance fund, whose excess reserves are below their statutory minimum, since premiums will be paid into the fund but claims will first be drawn down from TARP. Read more

This week, Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-IA) said that he expects President Obama to recess appoint former AFL-CIO and SEIU lawyer Craig Becker to the National Labor Relations Board (NLRB) after Congress adjourns at the end of the week. Becker’s nomination — as well as those of two other NLRB nominees — have been held up by conservatives in Congress.

The administration has been hinting for a while that a recess appointment for Becker is coming, and today Senate Republicans — who are using Becker’s nomination as a proxy battle over the Employee Free Choice Act (EFCA) — fired off a letter to Obama making their displeasure with these developments known:

We are writing to urge you not to overturn the bipartisan vote against the nomination of Craig Becker to be a Member of the National Labor Relations Board (NLRB) through a recess appointment. To do so would bypass the advice and consent traditions of the Senate…Taking this action would install a rejected nominee for an appointed term to the NLRB, setting an unfortunate precedent for all future nominations and future administrations.

Sen. John McCain (R-AZ), one of the principal authors of the letter, added that “if this administration chooses to recess appoint Mr. Becker, it would be just another example of putting the will of one special interest group over the will of the American people.”

These are pretty strong words from the GOP, claiming that Becker is a “rejected nominee,” who was voted down due to “the will of the American people.” You’d almost think he faced an up-or-down vote sometime.

However, if you thought that an up-or-down vote was ever held on Becker’s nomination, you’d be wrong. His nomination was filibustered, like so many others, as a motion to file cloture on his nomination was defeated by a 33-52 vote (with 15 senators missing the vote), eight short of the 60 needed to proceed to debate and a final vote.

So even if all of the non-voting members had voted no, Becker still would have received the approval of a majority of the Senate. But thanks to the Republicans using procedural votes to gum things up, Becker remains in limbo. And of course, conservatives didn’t seem to take umbrage with President George W. Bush’s multitude of recess appointments to the NLRB.

The NLRB has been in the spotlight this week because a case was heard by the Supreme Court that could invalidate more than 600 rulings that the board made while only two of its five members were in place. (The technical dispute revolves around whether or not two members constitutes a quorum). During oral arguments before the court, Chief Justice John Roberts directly asked why Obama has not simply solved the NLRB’s problem with recess appointments. And with the unprecedented obstruction that the Republicans are engaging in, that’s exactly the right question to ask.

Last month, Sen. Jim Bunning (R-KY) and a handful of his Republican allies caused quite the controversy by obstructing for days an extension of unemployment benefits that were set to expire. Bunning himself said “tough sh*t” to Democrats seeking a unanimous consent agreement to extend the benefits. He was subsequently hailed as a “national hero,” by Sen. Jim DeMint (R-SC) and earned the praise of Sen. John Cornyn (R-TX) and Sen. Jeff Sessions (R-AL). “I respect him for the courage he’s showed,” said Sessions.

When Bunning finally relented, a 30-day extension of enhanced benefits was successfully passed. But now those 30 days are coming to a close, and Republicans are “lining up” to play the same game again, and “leading the charge this time around will likely be” Sen. Tom Coburn (R-OK):

Coburn said it’s “highly doubtful” he’d let Democrats quickly pass an extension this week to keep benefits going until May 5 — if the $10 billion isn’t offset with spending cuts…At a closed-door lunch Tuesday, Coburn and several other GOP senators said they’d battle the Democrats if they pile the costs of the bill onto the deficit, several attendees later said…[P]ublicly — from moderates to GOP leaders to the hard-core conservatives — Republicans told POLITICO Wednesday that they agree to fight the efforts this time.

Various senators, including Sen. Susan Collins (R-ME) and Sen. George LeMieux (R-FL), have hinted that they will help Coburn oppose the extension, unless an offset is found. “At some point, enough is enough,” LeMieux said.

Of course, as the National Employment Law Project’s Judy Conti explained, offsetting unemployment benefits is just bad economics. “Every economist from every side of the political spectrum will tell you that unemployment benefits are most stimulative when they are not offset,” she said. “In the history of the unemployment program, we have never off set these programs.” If the GOP was honestly concerned about finding offsets, then they should advocate paying for the extended benefits over the long-term (10 years, for instance). But instead, they favor redirecting stimulus spending, defeating the whole purpose of taking steps like these.

Obstructionism is not really surprising coming from Coburn — who is called “Dr. No” — as he has openly admitted “I love gridlock.” But the extent to which the rest of the Republican caucus has embraced procedural tricks to prevent Congress from functioning is quite appalling. For instance, this week the GOP stopped two days of hearings, including those on national security matters, just because they were upset that health care reform passed.

For two years now, the National Labor Relations Board (NLRB) — which is responsible for mediating disputes under the National Labor Relations Act — has been stuck with only two of its five members in place. This is an significant problem, because there’s a serious legal challenge to the NLRB’s authority to issue rulings with just two members.

Yesterday, the Supreme Court heard arguments in New Process Steel v. National Labor Relations Board, and if the decision goes against the NLRB, more than 600 cases that the shorthanded board has decided could be thrown out.

The Obama administration has actually nominated members to the board, including former AFL-CIO and SEIU attorney Craig Becker, but Senate obstruction has prevented them from moving forward. Conservatives have decided that Becker’s nomination is a proxy battle for the Employee Free Choice Act (EFCA), believing that Becker will somehow institute EFCA all by himself, which is, of course, nonsense.

This obstruction has led the administration to hint that it may recess appoint Becker. And during oral arguments at the Supreme Court yesterday, Chief Justice John Roberts essentially agreed that recess appointments are the way to go:

NEAL KATYAL, DEPUTY SOLICITOR GENERAL: They were named in July of last year. They were voted out of committee in October. One of them had a hold and had to be renominated. That renomination took place. There was a failed quorum — a failed cloture vote in February. And so all three nominations are pending. And I think that underscores the general contentious nature of the appointment process with respect to this set of issues.

CHIEF JUSTICE ROBERTS: And the recess appointment power doesn’t work why?

Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-IA) said yesterday that he expects a recess appointment for Becker to occur. “It’s going to happen,” he said. A group of 20 business lobbying groups, led by the Chamber of Commerce, wrote Obama yesterday to advocate against a recess appointment, so they seem to be legitimately worried such an appointment will happen

If this is indeed the route Obama has to go, then he should. It’s unacceptable for the board that mediates labor disputes to be hobbled for so long and for Republicans to hold up the nominations over their disapproval of an unrelated piece of legislation. As Michael Whitney put it, “each time the right picks a fight with Becker, [TSA Nominee Errol] Southers, or the Employee Free Choice Act, both corporations and the right directly benefit from one fewer chance for workers to exercise their rights.”

Plus, Roberts’ line of questioning seems to indicate that he is leaning toward throwing out all of the hobbled NLRB’s decisions, making it that much more important that the board return to full strength.

When it launched the Home Affordable Modification Program (HAMP) back in April, the administration hoped that it would provide mortgage modifications for 3 to 4 million borrowers. But according to a new report from the Special Inspector General for the Troubled Asset Relief Program (TARP) — from which $50 billion of HAMP’s money comes — the program is only going to reach 1.5 to 2 million borrowers, due to a variety of design flaws and changing economic circumstances.

So far, HAMP has only resulted in 168,708 permanent loan modifications, which is nowhere near enough to keep up with the rate of foreclosures. of course, we’ve known for a while that HAMP was hobbled by its reliance on incentives for banks to modify loans, without any real consequences for banks that drag their feet.

However, the movement of the foreclosure crisis from subprime loans to prime loans has also turned the foreclosure problem into one that HAMP was not designed to deal with, as it was originally aimed at only those stuck in unsustainable subprime loans, not “underwater” loans, where the borrower owes more than the home is currently worth. And according to the Inspector General’s report, a large proportion of HAMP borrowers are underwater:

During the course of our audit work SIGTARP was not able to obtain documentation to support the different estimates as to the weighted average of the combined mortgage loan amounts compared to the home’s value for all borrowers in HAMP trial modifications, but the numbers all indicate that the average HAMP mortgage is underwater. For example, Fannie Mae reported to SIGTARP that the ratio was 247 percent through November 2009, which Treasury has “corrected” to 140 percent. Treasury currently estimates that the ratio is 114 percent.

In plain English, this means that, even according to the most optimistic estimates, the average borrower in HAMP owes $1.14 for every $1 that their house is worth, and Fannie Mae thinks the ratio is more like $2.47 for every $1. For borrowers who find themselves that far underwater, HAMP will do nothing but prolong the time before they fall into foreclosure, as in the vast majority of cases, it only reworks monthly payments, not the total mortgage amount.

So the obvious remedy is to implement a program to reduce mortgage principals. Technically, HAMP allows for principal reductions, but these occur in less than 2 percent of cases. The administration is trying a pilot program in which it will give states funds to implement principal cuts, if they choose, while FDIC Chairman Sheila Bair is also looking at ways to force principal cuts. So the administration is well aware of the problem, but has yet to find a wider, workable solution. And unless a way to do this is found, as SIGTARP’s report summed up, we’ll be left relying on a program “that merely kicks the proverbial foreclosure can down the road.”

Yesterday, the Senate Banking Committee approved Chairman Chris Dodd’s (D-CT) financial regulatory reform legislation on a 13-10 party-line vote. Republicans had originally planned to offer hundreds of amendments to the legislation, including dozens of frivolous ones to change the legislation’s implementation date. However, they decided to hold off at the committee markup (leading to the markup lasting for all of 21 minutes), and instead propose their amendments when the bill is before the full Senate.

As I noted yesterday, many of the amendments that the GOP proposed aimed to weaken Dodd’s attempt to rein in banks that are “too big to fail.” Republicans do not want to place stricter capital standards on the biggest banks, do not want large non-banks (like AIG) to be regulated, and do not want to force the largest banks to pay into a resolution authority fund that will be tapped in case one of them fails.

But protecting the biggest banks from more stringent regulation isn’t the easiest position to sell, so Republicans are publicly insisting that Dodd’s bill doesn’t do an adequate job ending “too big to fail.” For instance, Sen. Richard Shelby (R-AL) said that the bill “still falls short of ending bailouts and associated moral hazards.” Sen. David Vitter (R-LA) added that it “still enshrines ‘Too Big To Fail,’ doesn’t replace it.” Sen. Judd Gregg (R-NH) appeared on MSNBC today to claim that “this bill unfortunately, sort of preserves ‘too big to fail.’”

But Shelby, Vitter, and Gregg might want to check in with Sen. Bob Corker (R-TN), who was leading Republican negotiations on regulatory reform for a time. Corker told the Huffington Post’s Ryan Grim and Shahien Nasiripour that Dodd’s bill does, in fact, go after “too big to fail”:

Corker, told by HuffPost of Vitter’s concern, said he agreed that there is “some tightening up that needs to take place.” But in general, he said, the bill does not enshrine “Too Big To Fail.” “In general, the concept there is good,” he said. Dodd’s bill would force failing banks into bankruptcy and liquidation. “Overall, I agree generally speaking with what’s been laid out.”

Of course, there are ways in which Dodd’s bill can be improved. I’d like to see the pre-paid resolution fund increased to the level that the House agreed to last year ($150 billion), instead of Dodd’s $50 billion. But Dodd has laid out a process in which a failing firm goes into bankruptcy unless it is too entangled within the financial system, at which point it goes into an FDIC resolution, using money put up by the financial industry itself. The bill also places stricter standards on the very biggest banks, as a disincentive to reaching that size. To claim otherwise is simply to follow GOP pollster Frank Luntz’s advice: characterizing regulatory reform as inevitably leading to “bailouts,” regardless of what the legislation actually says.

The Senate Banking Committee is set to begin marking up Chairman Chris Dodd’s (D-CT) financial regulatory reform bill today, which means working through (or dismissing) 473 different amendments. Many of those are pointless GOP amendments meant to waste time — such as more than 50 changing the effective start date of the legislation — but others reflect the current Republican courtship of the banking industry.

For starters, many of them aim to mitigate Dodd’s attempts to rein in banks that are “too big to fail,” including preventing regulators from implementing higher capital standards on the very biggest financial institutions. And one in particular, proposed by the Sen. Richard Shelby (R-AL), would further weaken the already scaled-back “Volcker rule” in Dodd’s bill.

The Volcker rule — proposed by the Obama administration and named after former Federal Reserve Chairman Paul Volcker — would ban banks from engaging in trading for their own benefit (proprietary trading) with federally insured dollars. Dodd has already weakened the rule, taking the administration’s hard ban and allowing bank regulators more latitude in implementing it. But the banks want this watered down even further:

The current language in the draft says federal agencies “shall issue final regulations implementing” the Volcker rule…“We believe the regulators should have the discretion to deal with the situation on a company-by-company basis,” said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, a Washington-based trade group. “You can’t have a blanket prohibition on proven risk- management techniques.” When senators meet to debate changes, “our hope is that they change ‘must’ to ‘may,’” Talbott said.

And lo and behold, Shelby has amendments doing exactly that:

Amendment Number	Sponsor	Description
187	Shelby	Amendment modifies Volker Rule language to provide greater discretion for regulators
188	Shelby	Amendment modifies source of strength language from a “shall” to a “may”, and includes a study

So Talbott, who represents the 100 largest financial firms in the country, asks and Shelby delivers! But as Volcker himself said, giving regulators too much leeway in implementing regulations leads to lax enforcement, when the banks lay their pressure on and complain that enforcement will cut into their bottom lines. “In my opinion, it’s very unlikely that the regulators and supervisors would evoke a strict prohibition until a crisis came and then it’s too late,” Volcker said. “Look, I’ve been a regulator for 20 years. So I know how they are.” Volcker advocated a strict legislative ban on proprietary trading with federally insured money that banks can’t escape.

But this is really par for the course for Republicans recently, as they have been hardly trying to hide their bank-friendly actions. Last week, House Minority Leader John Boehner (R-OH) told the banks to stand up to “punk staffers” writing new regulations, while Shelby himself added that bank profits always trump consumer protection.

This evening, the Senate Banking Committee is scheduled to begin markup of Chairman Chris Dodd’s (D-CT) financial regulatory reform legislation. A total of 473 amendments have been proposed, with Republicans accounting for the bulk of them. In fact, Sens. Richard Shelby (R-AL) and Bob Corker (R-TN), who were Dodd’s main negotiating partners on the Republican side, have proposed more than 200 of those (with Shelby putting forward 110 and Corker 98). All of the Democrats combined have suggested 94 amendments.

Many of the GOP’s amendments are pure nonsense, seemingly aimed at running out the clock until the Senate adjourns for a two week recess on Friday. For instance, Sen. Jim Bunning (R-KY) — the same senator who ground the senate to a halt to prevent the extension of unemployment benefits — has proposed 24 different amendments to change the effective date of the legislation’s implementation. Sen. Mike Johanns (R-NE) and Sen. David Vitter (R-LA) have 25 and 14 different amendments, respectively, also delaying the legislation’s effective start date.

Annoying, time-wasting amendments aside, Republicans are also aiming to water-down the substance of the bill, particularly that meant to rein in banks that are “too big to fail.” Dodd’s bill creates a resolution authority to unwind failing, systemically risky firms, which would be pre-funded by an assessment on the very largest financial firms. But Republicans not only want to do away with the pre-funded authority, they don’t even want to place stricter standards for capital and leverage on the biggest banks. Here is a roundup of GOP amendments aimed at weakening the way in which Dodd deals with “too big to fail”:

Amendment Number	Sponsor	Description
2	Vitter	To remove the ability of the systemic risk council to pre-designate firms as ‘too big to fail’ and arbitrarily regulate non financial companies.
8	Vitter	To end the FDIC’s authority to create a bailout slushfund and designate certain firms as too big to fail.
10	Vitter	To prohibit the creation of a prefunded resolution regime.
128	Shelby	Eliminate the authority for the Council to recommend heightened standards for the designated nonbank financial companies and large bank holding companies and requiring the Council to develop, construct, and perform stress tests
134	Shelby	Eliminate the authority of the Council to designate nonbank financial companies for regulation by the Board of Governors
135	Shelby	Eliminate Council and Board of Governors authority to pre-designate certain bank holding companies for heightened standards
175	Shelby	No Pre Funding
374	DeMint	To strike title II (relating to orderly liquidation authority)

So despite all their lip service paid to ending bailouts and “too big to fail” once and for all, these amendments prove that the Republicans really have no interest in doing either. The don’t want to place stricter standards on the biggest banks, they don’t want big non-banks (like AIG) to be regulated, and they don’t want the biggest banks to pay into a fund to prevent taxpayer funds from being tapped to resolve a firm. This is dressed up with words like “slushfund” and “arbitrarily regulate,” but what the GOP wants is for Dodd to ditch any language specifically aimed at the very biggest banks.

While it would be nice to live in a world in which the very biggest financial firms do not pose a systemic threat to the economy (and Dodd’s bill could arguably do much more toward getting us there), simply pretending that the very biggest banks aren’t systemically risky is silly.

At the very least, they should be subjected to stricter standards and have to pay into a fund that will be tapped if one of them has to be unwound. But Republicans would rather close their eyes and pretend that globally-linked financial institutions can just fail, without taking the rest of the economy down with them, while Dodd has laid out steps to responsibly unwind such firms without relying on taxpayer dollars.

This weekend, Democrats plan to vote on their health care reform reconciliation package, which also includes student loan reform. The Student Aid and Fiscal Responsibility Act (SAFRA), which would cut billions of dollars in senseless subsidies to private student lenders, passed the House last year. As of yesterday, it has a corresponding senate counterpart, which will be included in the reconciliation bill.

Currently, the federal government gives billions of dollars to student lenders to originate loans, and then guarantees loan repayment up to 97 percent, so the lenders are essentially useless middlemen that aren’t exposed to any of the loan risk. This is corporate welfare at its finest. So in order to build opposition to the bill, both the lenders and Republicans in Congress have been borrowing a tactic from the health care debate by falsely characterizing student loan reform as a “Washington takeover” of lending.

But House Minority Leader John Boehner (R-OH) took this a step further last night, saying that student loan reform would actually “eliminate every bank in the country and all student loan lenders,” replacing them with the government:

Well, if you look at this student loan provision in there, they eliminate every bank in the country and all private student loan lenders so the government can do it instead.

This is just astoundingly wrong. On a very basic level, it could only be true if the sole thing banks did was make student loans, which is obviously not the case. The day after student loan reform passes, banks will still be there, cashing checks, taking deposits, making home loans, and on and on.

But the greater point Boehner was trying to make is that student loan reform is somehow a new expansion of government into the private economy. Sen. Mike Enzi (R-WY) echoed this sentiment yesterday, saying that student loan reform amounts to “seizing control of industries and squeezing out private competition.” But the government already provides the money for the loans and guarantees the lenders against loss, in addition to directly making millions of loans every year. So student lending is, for all intents and purposes, already a federal program.

In fact, the subsidized private program that Boehner and Enzi want to preserve is called the Federal Family Education Loan Program. By cutting the middlemen out of the process, the government will not only save billions of dollars to be used for deficit reduction, but will also have the money to increase Pell Grants and thus boost the number of college graduates. According to an analysis by CAP Senior Fellow Ulrich Boser, the boost in incomes due to student loan reform will top $100 billion.

And at the end of the day, the bill doesn’t even cut private lenders completely out of the loop, as they still would be contracted to service the loans (collect payments, etc.). But Boehner has decided that this is his week to go all out for the bankers — telling them to stand up to “punk staffers” trying to write new regulations — so it’s really not surprising that he’s willing to distort student loan reform to argue for his bank-friendly policies.

The American Bankers Association was in Washington this week for a governmental relations summit, giving 900 bankers ample opportunity to run around Capitol Hill trying to talk lawmakers into watering down financial regulatory reform. “We have a lot of work cut out for us,” said David Bochnowski, an Indiana bank executive. “Our job is to have an impact on the Hill.” “We need to shape what’s in and what’s out of any reform legislation,” Michigan banker Art Johnson added.

During the summit, the assembled crowd of bankers has received plenty of support from Republican lawmakers. “You’re all going to be lobbyists today. I know that’s a dirty word, but that’s what you’re doing,” said House Minority Leader John Boehner (R-OH), adding, “don’t let those little punk staffers take advantage of you and stand up for yourselves.”

One of the aspects of financial reform that the banks are most opposed to is the creation of a new entity charged with protecting consumers. And at the summit, Sen. Richard Shelby (R-AL), the Senate Banking Committee’s ranking member, told the assembled bankers exactly what they wanted to hear — that bank profits should always take priority over “consumer finance whatever“:

“Safety and soundness trumps everything,” Shelby said to loud applause. “It trumps the consumer finance whatever.”

This sounds exactly like Comptroller of the Currency John Dugan’s pronouncement this week that it’s “backwards” to put consumer protection above bank profits. These are really blatant examples of where conservatives are regarding regulation: they believe that financial institutions should be able to do literally anything they want, so long as it’s profitable. In fact, Shelby promised the bankers that “if there were 59 Senate Republicans ‘you wouldn’t have to worry‘ about a new consumer agency.”

And Shelby’s line about safety and soundness is precisely what the bankers wanted to hear. In fact, it was the line they were using themselves as they lobbied lawmakers to ditch the consumer protection agency, as this report from CNBC shows. Watch it:

Of course, if the bankers and their Republican allies truly believe that the banking industry can only make money by ripping off consumers, that’s a sorry sign. As Stephen Lubben put it at Credit Slips, “did toaster companies go out of business when the Consumer Product Safety Commission stopped letting them sell exploding toasters? I guess the ones who couldn’t make it selling legitimate toasters did — but the Senator can’t really be saying that America’s banking industry is like a shoddy toaster company, can he?”

Last weekend, the Obama administration released its proposal for reauthorizing and revamping No Child Left Behind (NCLB), the Bush-era education law. According to Time Magazine, reauthorizing NCLB “may be one of the few issues capable of drawing bipartisan support,” as the original law was crafted by both parties, and education reform issues tend to not break down cleanly along party lines.

However, in a hearing yesterday before the House Education and Labor Committee, Education Secretary Arne Duncan faced criticism from Republicans who charge that the administration’s NCLB vision includes too much “federal encroachment” and Washington control:

Representative Pete Hoekstra, a Michigan Republican, said local school officials told him they spend too much time and money complying with No Child Left Behind, the signature education legislation enacted under Republican President George W. Bush. “Now, you geniuses in Washington come up with a new approach for us,” Hoekstra said…Kline criticized the administration’s plan to link U.S. money to states that adopt common academic standards as a federal encroachment on the local authority to develop curriculum.

Kline previously expressed concern with many of the administration’s proposals, saying that that they “increase federal intrusion.”

Of course, it’s nothing new for Republicans to accuse the Obama administration of trying to craft some Washington takeover — just look at the debates over health care and student loan reform. But when it comes to NCLB, this is really an absurd assertion, as the administration’s entire plan revolves around encouraging common-sense standards for student achievement and then letting states and local school districts figure out the best way to achieve them.

In order to achieve its goals, the administration embraces a push by the National Governors Association to adopt common federal education standards. The plan does away with NCLB’s “yearly progress” evaluations, in favor of wider measurements, allowing schools to incorporate subjects other than reading and math (which NCLB is currently limited to). But it doesn’t spell out how schools should meet these standards and it gives states the ability to craft tougher standards, if they choose.

As CAP’s Cindy Brown noted, under the administration’s plan, only the very lowest achieving schools will have to take specific actions, while “those who are progressing at a steady, if not an ideal, pace will have greater flexibility and those who are most successful will be rewarded financially and identified publicly.” Former Bush Education Department official Mike Petrilli noted that the proposal would enact “dramatic change in the federal role in education — one that would be more targeted, less prescriptive, and use a lighter touch on the vast majority of America’s schools.”

In fact, Petrilli specifically calls out Kline for not understanding the proposal, saying that “with its call for common standards but its vast increase in flexibility over state accountability systems, it lives up to the ‘tight-loose’ premise.”

For the record, not all congressional Republicans had a nonsensical reaction to the administration’s proposal. “What we have learned is that a better balance is needed between prescriptive federal mandates and state and local flexibility,” Sen. Mike Enzi (R-WY) said. “The blueprint seems to reflect this belief.”