Today, the Center for American Progress and the Hamilton Project held a conference examining challenges in the labor market, but since the topic du jour right now in Washington is financial regulatory reform, the discussion almost inevitably wound its way to that subject. The day’s final panel featured New York City Mayor Mike Bloomberg and National Economic Council Director Larry Summers, both of whom weighed in on financial reform.

Bloomberg, of course, is mayor of a city that depends, in very large part, on tax revenue from Wall Street bonuses, so he’s hesitant to endorse much that will significantly crack down on financial sector profits. To that end, when asked about the proposed creation of a new consumer protection regulator, Bloomberg said that he’d prefer the focus be on financial literacy education, “not restrictions.” Summers, however, disagreed:

We don’t allow you to sell baby seats that are unsafe for babies. We don’t allow you to sell baby seats that look good, but that have 20 pages of print that say ‘by the way, it’s not safe’…I don’t see the problem with some regulation that actually goes to the content of the product.

This resembles the rhetoric employed by Harvard Law Professor Elizabeth Warren in making her case for the creation of an independent consumer protection regulator. As she pointed out way back in 2007, you aren’t allowed to sell a toaster with a 20 percent chance of exploding, but you can sell a mortgage with a 20 percent chance of putting a family into foreclosure:

It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street…Similarly, it’s impossible to change the price on a toaster once it has been purchased. But long after the papers have been signed, it is possible to triple the price of the credit used to finance the purchase of that appliance, even if the customer meets all the credit terms, in full and on time. Why are consumers safe when they purchase tangible consumer products with cash, but when they sign up for routine financial products like mortgages and credit cards they are left at the mercy of their creditors?

During the financial reform debate that is set to kick into high gear next week, Republicans are set to propose amendments gutting the consumer protection portion of Sen. Chris Dodd’s (D-CT) legislation. But to be effective, the new regulator has to be able to ban financial products that serve no purpose other than to boost bank profits at the expense of consumers.

Our guest blogger is Rebecca Lefton, a researcher for Progressive Media.

BP’s profits rose an unexpected 135% in the first quarter of 2010 compared with the first quarter the prior year. Yet these were “overshadowed” by the tragic oil spill resulting from an explosion at the Deepwater Horizon oil drilling rig, located 40 miles off the coast of Louisiana. The rig is owned by a Switzerland-based company, Transocean Ltd, and leased to BP (formerly British Petroleum). These companies and Halliburton, whose cementing operations may have caused the explosion—are being sued for negligence.

BP has aggressively rebranded itself as a company focused on alternative, clean energy sources. The company has a series of commercials advertising their “Beyond Petroleum” campaign “promoting and marketing alternative energy solutions.” But “Beyond Petroleum” is an Orwellian slogan for what is still almost entirely an oil company focused on making billions every year from dirty fossil fuels. A new video from the Center for American Progress Action Fund’s Victor Zapanta depicts BP’s greenwashing in contrast with the tragic results of its drilling operations:

Indeed, although BP ads depict green flowers and spinning windmills, BP only invested a tiny fraction of their profits into alternative energy last year. Their actual investments in alternative energies — $1.3 billion in 2009 — are dwarfed by their profits. In fact, the last two years their budgeted alternative energy investments were around seven percent compared to profits. According to Driessen of the Atlas Economic Research Foundation, BP spent the same amount on this advertising over two years (the campaign was launched in 2000) as they did on hydrogen, wind, and solar energy over a six-year period:

Beyond ‘Beyond Petroleum’ Greenwashing Lies Tar Sands. On April 14, BP “easily beat off challenges to a Canadian oil sands project and to its executive pay policy.” BP rejected a shareholders resolution in opposition to Canadian tar sands production “because it emits more carbon dioxide than traditional oil production, uses more water and involves greater destruction to the landscape.” [Reuters, 4/15/2010]

BP Quit Climate Action Partnership. “ConocoPhillips, BP and Caterpillar have dropped out of the U.S. Climate Action Partnership (USCAP), the coalition of corporations and environmental groups that has been most prominent in pushing Congress to pass cap-and-trade legislation.” [Washington Post, 2/17/2010]

$16 Million In Lobbying. BP spent $16 million lobbying in 2009. [Open Secrets]

BP Profiting From Iran — Threatening our National Security. “BP, in a 2009 filing with the Securities and Exchange Commission, said it had interests in and was the operator of two fields and a pipeline located outside Iran in which the National Iranian Oil company had an interest.” [New York Times, 3/6/2010]

41% Raise For BP’s CEO. “Chief Executive Tony Hayward’s total remuneration and share awards rose 41% in 2009 on performance bonuses from improved operations which made the company one of the best performing oil majors in the fourth quarter, despite lower full-year profits due to the fall in the oil price.” [Wall Street Journal, 3/5/2010]

Americans are spending nearly $3 billion more on gasoline due to higher gasoline prices. And taxpayers are spending billions of dollars in tax subsidies to Big Oil. These subsidies will cost the U.S. government about $3 billion next year in lost revenue and nearly $20 billion over the next five years. The next dollars we spend should go to companies that provide genuinely clean and safe fuel. The costs are too high.

Next week, the Senate will begin to vote on amendments to Sen. Chris Dodd’s (D-CT) financial regulatory reform bill, and a slew of proposals are expected from both the right and the left. For instance, Sen. Ted Kaufman (D-DE), along with Sen. Sherrod Brown (D-OH), have an amendment capping bank size, while Sens. Jeff Merkley (D-OR) and Carl Levin (D-MI) are planning an amendment institutionalizing the Volcker rule, which would prevent banks from trading for their own benefit with federally insured dollars.

Republicans, meanwhile, are planning amendments aimed at weakening Dodd’s Bureau of Consumer Financial Protection and blowing holes in Sen. Blanche Lincoln’s (D-AR) surprisingly strong derivatives regulation. But those are fairly high-profile issues.

As evidenced by a document released today by the Senate Republican Policy Committee (RPC), the GOP is also taking aim at some smaller issues, which nevertheless could significantly impede the effectiveness of financial reform. Here are two points made by the RPC that show where the debate is headed:

– The bill creates overlapping and potentially conflicting regulations: The Dodd bill does not fully and clearly preempt state law. Indeed, the bill provides that it does not preempt state laws that provide greater protection than federal law.

– The bill would weaken arbitration, harming consumers and investors. Arbitration is a form of alternative dispute resolution that has long been recognized as an effective tool for efficiently and fairly resolving disputes.

Both of these statements are absolutely true: Dodd’s bill wouldn’t preempt state law and would weaken arbitration. But, contrary to the RPC’s assertions, these are important steps that will protect consumers from the excesses of the financial industry.

Preemption of state law, as I’ve discussed here often, played a large role in allowing the subprime crisis to spread. Many states had laws that went further on cracking down on shoddy lending than federal law, but President Bush’s regulators preempted them, stopping states in their tracks and allowing pernicious lending practices to continue unabated.

Arbitration, meanwhile, is a practice used by the financial industry to ensure that it can’t be sued for exploitative business practices. As Ian Milhiser has pointed out, “for years, the banking industry has padded its profits by forcing consumers to sign a ‘forced arbitration’ agreement denying them to right to sue the bank in a real court, and instead forcing any disputes between the bank and a lender into a biased, corporate-run forum that rules in favor of the banking industry 95% of the time.”

The banking industry is going all out against this legislation, as it is strong in a number of areas and would change the dynamic between consumers and the financial industry in many ways. And it’s these sorts of little changes, in parts of the bill that aren’t getting the headlines, where the industry, aided by willing Republicans, can have a lot of success. Proponents of the bill will have to take a stand against these sort of changes.