Are We Safe From Another Economic Collapse And Hurricane Sandy Disaster?

NJ.com — Thursday, October 9, 2014

By John D. Atlas / NJ Voices

On Friday, October 10, 2014, the New Jersey Citizen Action Education Fund (NJCAEF), will host its Financial Reform Summit V: Let's be Frank!

While experts will discuss the current federal laws aimed at protecting us against another financial collapse, as well as laws safeguarding seniors from financial fraud, the lingering effects of Hurricane Sandy on New Jersey's economy, and the foreclosure crisis, the history of how the financial reform came about is one of the untold grassroots social justice success stories.

It involved a diverse group of progressive organizations that took on the powerful financial lobby, pushed Congress to create a strong new consumer protection agency (The Consumer Financial Protection Bureau), and against the odds, and won. The victors relied on the leadership of Elizabeth Warren and a new umbrella entity called Americans for Financial Reform (AFR) led by two extraordinary organizers, Heather Booth and Lisa Donner, and local state and community groups like NJ Citizen Action.

After Barack Obama's 2008 election the nation faced the worst economic crisis since the Great Depression caused by four decades of government deregulation of the financial services industry. Americans were sold a flawed economic philosophy that claimed we need an "unfettered free market" to increase homeownership and bring about prosperity. Mortgage companies duped families into refinancing mortgages using deceptive sales practices and charged high-unregulated interest rates and fees. Wall Street firms packaged the sub-prime loans into exotic investments that few understood. Credit agencies cheated on the ratings.

Democrats, led by Congressman Barney Frank, proposed the most comprehensive financial reform since the New Deal to avoid another crisis. At tomorrow's Newark summit, Frank will give the keynote address.

To police bank abuses they proposed a Consumer Financial Protection Agency (CFPA) as part of the comprehensive reform. It would require clear up-front banking prices not buried in fine print, but visible and understandable to ordinary people. The new agency would have autonomous power to write regulations governing everything from credit cards and overdraft fees to payday loans and mortgages. The agency's regulatory authority would extend to banks and non-bank lenders such as tax preparers offering refund anticipation loans.

The best and brightest executives from Goldman Sachs, and other Gordon Geckos of Wall Street, who caused the world financial disaster, responded by thumping their noses at the public by paying themselves billions of dollars in bonuses while spending hundreds of millions on lobbyists to fight against the new agency and other reforms that would protect future borrowers from abuse. The U.S. Chamber of Commerce also bombarded members of Congress to weaken or ditch the CFPA.

The people who had lost their homes, their housing wealth, their jobs, billions to taxpayer funded bailouts, and trillions in lost college and retirement savings needed a powerful voice. A few labor and citizen groups mounted an effort to get Congress to pass laws that gave some democratic control over the financial sector, but their work was scattered and localized and unlikely to be sufficient to win substantial reforms.

Obama told the public that he was committed to strengthening the enforcement of regulations designed to oversee Wall Street, and he supported the idea of a new consumer-oriented agency to look after Main Street not Wall Street. But Warren, leaders of AFR, and local activists like Phyllis Salowe-Kaye knew that in a democracy dominated by powerful financial interests, you couldn't rely on the President or Congress to fight populist battles on their own.

NJCA, along with local the local AARP, led by Marilyn Askin, the NJ ACORN chapter, and other NJ groups, joined the national coalition that included USAction, National Council of La Raza, private financial firms like American Income Life Insurance Company, AFL-CIO, Common Cause, Consumer Federation of America, and Public Citizen.

Successful passage of the Dodd-Frank Act with its landmark new consumer agency took a massive effort by Warren, the "policy entrepreneur;" and the brilliant lesser-known community organizers. Congress passed a good bill with two critical exceptions. The group failed to abolish the National Bank Act, which preempted states from enacting tougher laws governing auto dealers.

More important, the CFPA proposed by Obama would have included the enforcement of the Community Reinvestment Act (CRA), which helped to limit redlining, and arguably the most important post-1970s reform for building wealth for the working-poor and revitalizing inner city neighborhoods. Lax enforcement by banking regulators had undermined the effectiveness of CRA, but the AFR was unable to incorporate the enforcement of the CRA into the consumer protection agency, known as CFPA.

The CRA reform effort was directly connected to the ferocious attack by the Republican Party coordinating with the Fox News and the rest of the Right Wing echo-chamber against ACORN, an AFR member with the largest grassroots urban base fighting for financial reform. The failure of coalition members to circle the wagons to protect ACORN from the false attacks contributed to the failure.

The story, documented in " Financial Justice" by Larry Kirsch, an economist, and Professor Robert N. Mayer, is about how activists held wavering members of Congress accountable for key votes, while addressing the larger issue of how social movements can contribute to progressive political change.

If you are interested in attending tomorrow's summit click on this link.

WHEN IS IT? Friday, October 10, 2014 from 10:00am to 2:00pm
WHERE? Rutgers Newark - Paul Robeson Campus Center, located at 350 Dr. Martin Luther King, Jr. Blvd. - Essex Room in Newark, NJ (registration begins at 9:30am). There is NO COST to attend this event

Panelists include:
Marilyn Askin, Chief Legislative Advocate, AARP New Jersey
Staci Berger, Executive Director, Housing and Community Development Network of New Jersey
Rebecca Doggett, Senior Fellow of the New Jersey Institute for Social Justice - Retired
Jerome C. Harris Jr., Interim President and CEO, The New Jersey Institute for Social Justice
Lawrence Hamm, Executive Director, The People's Organization for Progress
Kristin Johnson, Professor of Law, Seton Hall Law School
E. Robert Levy, Executive Director and Counsel, Mortgage Bankers Association of New Jersey
Zixta Martinez, Assistant Director of Community Affairs, The Consumer Financial Protection Bureau
Wayne Meyer, Executive Director, New Jersey Community Capital
Trina Scordo, Executive Director, New Jersey Communities United
Jessie Van Tol, Director of Communications, National Community Reinvestment Coalition

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