Senators Propose Financial Product Safety Commission

Senators Durbin and Schumer today proposed making a “Financial Product Safety Commission.” (an idea originally put out there by the super-awesome Elizabeth Warren 2 years ago). Shumer likened it to the Wild West days of medicine in the 1900s when snakeoil got peddled from street corners and magazines, saying, “Those who sell quack financial products in the 21st century” should be “reined in, not with disclosure, but with real limits.” If it comes to fruition, hopefully unlike other government protection agencies it will be staffed by consumer advocates instead of industry insiders.

Schumer, Durbin Propose New Consumer Watchdog Agency [Bloomberg via DefendYourDollars]

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  1. Tightlines says:

    Let me just get this out of the way now:

    Socialism, free market, regulation, nanny state, liberals.

    Am I missing anything?

    • Con Seannery wants the azure F back! says:

      @Tightlines: One of those things is not like the others?

    • cmdrsass says:

      @Tightlines: you forgot Poland, I mean Obama.

    • ironchef says:

      @Tightlines: Let me get this out of the way… robber barons, Bernie Madoff, Enron, AIG, subprime, fiscal conservatives ballooning the deficit, and republican admin asleep at the regulatory wheel.

      • sleze69 says:

        @ironchef:

        robber barons – should have gone to jail but it wasn’t illegal

        Bernie Madoff – going to jail but his sons are still free

        Enron – People went to jail

        AIG – bailed out – should have gone bankrupt

        fiscal conservatives ballooning the deficit – hypocrits

        republican admin asleep at the regulatory wheel – not asleep – part of the whole mess

        The real answer is actually holding these people accountable. There are a lot of people involved in this mess who should be put in jail for fraud (lieing about their income, lieing about someone ELSE’s income, rating securities WAY too high, etc). If these millionares were bankrupt and sent to jail, it might serve as an incentive against getting involved in the next great scam.

        WRT to this FPSC, with Free Enterprise there is also caveat emptur. If someone is dumb enough to invest in something legal but stupid (like Sirius XM, for instance) they should lose their money.

    • Stephmo says:

      @Tightlines: Did you even read the link to the proposal, or are you just a knee-jerk reactionary?

      In the first freaking paragraph – in the same way that you cannot physically buy a toaster in this country that has a 1 in 5 chance of burning down your home thanks to the consumer product safety commission, economists have been proposing a similar safety commission for financial products.

      And folks can go, “oh, people just have to be smart!” all they want, but there comes a point where you just can’t know things (like the recall rate of your combustible toaster). It’s nowhere near as easy as anyone likes to think it is (screaming CNBC monkeys aside).

      Not to MENTION, this means that securitzation can get back on track. For the niche products that were getting bundled in, the ratings were often done based on “whatever” because there wasn’t a good way to rate this kind of nonsense. What should have been a good revenue stream for everyone was becoming a gambling scheme. The creative financing products designed to repackage loans that were otherwise unaffordable (and unhealthy for consumers) temporarily looked good enough to securitize with another bank. Because that can’t ever go bad…

      Oh, crap.

      But, hey, you go ahead and worry that some “personal freedom” is being trampled on, okay sport? I’ll take the loans that won’t set our houses on fire.

  2. dlynch says:

    elizabeth warren IS super-awesome.

  3. TEW says:

    The part that no one is talking about is Fannie and Freddie. Most subprime loans would not have been made if they could not pawn off the loans on a willing government agency. These government agencies have escaped with little blame and are going to be better off with the havoc they caused.

    • bohemian says:

      @TEW: Uh most of the bad loans were held by regular banks, not guaranteed by Fannie or Freddie directly.

      Why not just go full on freeper and blame brown people and those eeevil liburuls in congress who forced those poor banks to loan people money they didn’t want to. That is the usual nonsense spouted.

    • huadpe says:

      @TEW: Ok. “subprime” has a very specific meaning with mortgages, and it doesn’t just mean “bad.” Subprime mortgages are loans which FM and FM would not insure.

      Fannie Mae and Freddie Mac did alot to drive up housing prices, did alot to make money off the implicit backing of the federal govt, and were in many ways sleazy. But, by definition, FM and FM did not touch subprime.

    • ironchef says:

      @TEW: The loans were marketed, processed, packaged by private mortgage brokers.

      The ones making the loans are the primary reason why we are in this mess.

  4. wfgunn says:

    why does Elizabeth Warren look like Dr. Manhattan? curious minds want to know…

  5. JulesNoctambule says:

    The accompanying graphic marks the first time my husband has paid attention to a story here without my encouragement. We just got back from seeing Watchmen, too.

  6. theodicey says:

    You realize the definition of “subprime” is “too crappy for Fannie and Freddie to buy”?

    “The term subprime often correlates with non-conforming loans, or those that do not meet Fannie Mae or Freddie Mac guidelines. Those guidelines may be the size of the loan, a high debt-to-income ratio or lack of income documentation provided.”

    – Wikipedia, because I’m lazy and you’re spouting the dumbest conservative talking point of the past year

    • Eyebrows McGee (now with double the baby!) says:

      @theodicey: “you’re spouting the dumbest conservative talking point of the past year “

      There must be some kind of greasemonkey plug-in that will replace conservative buzz words with things like unicorns and puppies.

      Then we could have, like, “the CRA made the unicorns sell puppies to the underwear gnomes” and it would have the benefit of being both less annoying and more surreal.

  7. savdavid says:

    Unfortunately, the powerful banks, investment firms, credit companies, etc. will instruct their lobbies representing them to pay lots of money to the Congress and it will fail (probably using our own taxpayer bailout money to help pay the bribes).

  8. RogueSophist says:

    I approve. Does this mean CPSC-analogous ineffectual oversight? For example, will my accidental enrollment in Triple Advantage give me lead poisoning? Or cancer?

  9. N.RobertMoses says:

    Yet another black hole for our tax dollars to go down!

  10. robothouse says:

    This awful plan, it screams like an abattoir full of retarded Senators. This infringement on free enterprise is afraid of me. I’ve seen its true face.

  11. MooseOfReason says:

    We have yet another government agency to give people a false sense of financial security, like the SEC gave Madoff’s investors.

  12. magic8ball says:

    Ack. Comment replies are still not working for me in either Firefox or IE.

    Anyway. @ Eyebrows McGee: +1 internets. Can somebody please get on that right away?

  13. rpm773 says:

    So is that pic the desktop background for Ubuntu 9.04/Jaunty Jackalope?

  14. ajlei says:

    It wasn’t until the third time I browsed to here that I realized what was so wrong with the “girl” in that picture.

    Yikes.

  15. dresden says:

    If they’re so big on stomping on snake oil salesmen, why the hell do I still see Enzyte commercials?

  16. sonneillon says:

    I have heard that Madoff is looking for a job. Knowing the government they will put him in charge.

  17. Tightlines says:

    @undefined: @Stephmo: Erm, yeah. I was mocking our republican commenters.

    Someone needs a sarcasm detector.

  18. battra92 says:

    Anything that comes from Lil Chuckie Schumer and Dick Turban I don’t trust.

  19. theblackdog says:

    It took 45 mins for a blue penis joke based on the picture? People are slipping.

  20. everfade says:

    @tightline: You forgot IMMERGRUNTZ

  21. Saboth says:

    Sounds good to me. Hopefully they can reign in all these speculators that manage to drive up gas to $4.50 a gallon when oil is actually trading way below a price that was necessitate that. Seems to me there is no transparency on wallstreet, and a handful of companies/people have more power than our whole current government, with lots of shady deals going on behind closed doors. IMO, a handfull of rich shouldn’t control fuel, food, housing for the entire country. If there were better watchdogs, we wouldn’t have had this meltdown in the first place.