Do we want to be protected by our government or from our government? There is a fine line between being bullied by Washington and being shielded from bullies by an overaggressive nanny state. The villain of choice for Democrats is still Wall Street, but the Democratic Party seems to be doing most of the bullying these days.
The White House continued its ongoing Wall Street vs. Main Street harangue yesterday while reminding us that the Obama nanny state has our backs:
Wall Street reform also created the first-ever independent consumer watchdog, whose sole job is to look out for you.¹
What does looking out for the middle class mean?
The president’s weekly address reminded Americans about a federal consumer protection website created by the Dodd-Frank Act’s Consumer Financial Protection Bureau, consumerfinance.gov. When you don’t agree with what’s on your credit report, all you need to do is visit consumerfinance.gov “…and let the consumer watchdog know.”² You can get help with bank accounts, student loans, credit cards, and mortgages. All you have to do is go to your government.
Who is the president really trying to protect? Democrats. The GOP stands accused of siding with financial interests and trying to undermine Wall Street Reform’s vengeance for the middle class. Democratic Whip Steny Hoyer complained about GOP bullies while claiming that the Consumer Protection Bureau created by the Dodd-Frank Act could prevent another recession:
At the same time, House Republicans are moving to dramatically weaken the Consumer Financial Protection Bureau, which was created in response to economic crisis that cost millions of Americans their jobs. Democrats created this agency to help prevent another job-destroying crash from recurring, and to safeguard Americans against predatory lending that takes advantage of middle-class families.³
The president is still wailing away about the joint Wall Street–Republican Party cabal:
Backed by an army of financial industry lobbyists, they’ve been waging an all-out battle to delay, defund and dismantle these new rules.4
Will paying for more federal bureaucracy protect the middle class from financial bullies?
Nanny state consumer protection costs money.
We shelled out $68 million on 15 consumer protection financial literacy programs and $137 million on 4 housing information and counseling programs in 2010.5 The Treasury Department had already created an Office of Financial Access, Financial Education, and Consumer Protection in 2002 that failed to prevent Hoyer’s “job-destroying crash.” The goal of Treasury’s consumer financial watchdog efforts are:
… to ensure that every American has access to safe and affordable financial products and services, and clear information that enables individuals to make sound financial decisions.6
The Dodd-Frank Act created a Consumer Financial Protection Bureau in 2011 with an Office of Financial Education that sounds suspiciously similar to Treasury’s:
Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families— that prices are clear up front, that risks are visible, and that nothing is buried in fine print.7
Everything is buried in fine print. Get used to it.
Time for the middle class to suck it up and share some responsibility.
Anyone who agrees to be saddled with the responsibility for a student loan or a mortgage should be able to understand the consequences of what they are signing, or they should call it quits after high school and start looking for apartment rentals.
The Obama administration has all but absolved those Americans who knowingly took out bad mortgages because it was all they could get. Nevertheless, we are saddled with the Dodd-Frank Act and its nanny state consumer protection bureaucracy, which is worried that students intelligent enough to be admitted to college are surprised by the unpleasant legalese buried in their student loan papers:
The Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman released a report today that details problems reported by private student loan borrowers. According to the report, private student loan borrowers say they are sometimes surprised by the terms and conditions of their loans, they are given the runaround by their loan servicer, and they have few options to refinance or modify repayment for a better deal.8
Student loan bailout, anyone?
Americans should provide their own consumer protection.
Investments go bad. Savings are lost. Someone who loses a financial bet will always claim the risks were hidden or they were told a different story by their lender or stockbroker. The problem is not that Americans are being swindled en masse by financial interests backed by the Republican Party, but that the Obama economy erased all hope of recouping lost investments and savings, or finding jobs that pay enough to make student loan payments affordable.
Instead of running for the protective arms of our Democratic nanny state, we would do better to question the ethics of instilling fear and mistrust of financial interests in middle class Americans who should be worried about Social Security’s solvency and need to pay for their retirements by investing instead of believing politicians’ assurances that entitlements will always be there. Partisan anti-Wall Street propaganda does not generate income or fund retirements. It only secures a better future for Democrats on the backs of the middle class.