The Daily - Tuesday, Nov. 28, 2017

On Monday morning, two rival bosses showed up for work at the government’s top consumer financial watchdog — one a holdover from the Obama administration, the other a rushed temporary appointee of President Trump’s. We look at the messy public fight for control of the Consumer Financial Protection Bureau. Guest: Gary Rivlin, a former New York Times reporter who is an Investigative Fund fellow at the Nation Institute. For more information on today’s episode, visit nytimes.com/thedaily.

Duration: 23m
Broadcast on: 28 Nov 2017
Audio Format: other

Guest: Gary Rivlin, a former New York Times reporter who is an Investigative Fund fellow at the Nation Institute. For more information on today’s episode, visit nytimes.com/thedaily.

For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

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With no fees or minimums on checking accounts, it's no wonder the Capital One Bank Guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends. It's pretty much all he talks about in a good way. What's in your wallet? Terms apply, see CapitalOne.com/BankGuy, Capital One NA. Member FDIC. From the New York Times, I'm Michael Barbero. This is The Daily. Today, on Monday morning, two rival bosses showed up for work at the federal government's top consumer protection agency. Why a nominee of President Trump and an Obama holdover are publicly and messily fighting for control of an agency that Democrats in Washington love and Republicans hate. It's Tuesday, November 28th. Gary, where did the idea for the Consumer Financial Protection Bureau first come from? So Elizabeth Warren, then a law professor at Harvard, wrote a paper in an obscure journal in 2007 saying maybe there should be a Consumer Financial Protection Bureau, just like there's a Consumer Product Protection Bureau. Gary Rivlin has been reporting on the agency since its beginning. And what does this paper that Warren writes from her perch as an academic? What does it actually envision? There would be an agency for the federal government that looked out for the rights of people in their financial decision, just like there's a product safety division, an agency that makes sure that our toasters are safe and they'll blow up in our kitchen. So her idea is like, hey, for a $20 toaster, we have this agency. What about for a $20,000 mortgage that can really destroy someone's life if it explodes? And what's happened to home mortgage for closures over the last 25 years? They're up three and a half full. That's remarkable, particularly because interest rates are low today. And does anyone in Washington pay particular attention at the time to this paper and to this idea that this Harvard professor has for protecting American consumers from financial products that might hurt them? I'm sure the think tank folks, but I'm not sure where it would have gone if it wasn't for the financial crisis we had a year later. Suddenly, this idea from an then barely known academic took on a life of its own. The stock market is now down 21 percent. We're now down 43 percent. Let's talk about the speed with which we are watching this market deteriorate. Who knows where this is going to end up. I mean, this is volatility. We haven't seen, of course, since way before you and I were born. Two-year no-yields, one from 190 to 166 in the blink of an eye. You know what, right now, breaking news here, stocks all around the world are tanking because of the crisis on Wall Street. Suddenly, Congress had to act. Party Frank from Massachusetts. This is a continuation of the markup that began yesterday on 3126. I will ask everybody to take a seat. He was the chair then of the House Financial Services Committee. He takes Elizabeth Warren's idea for this Consumer Financial Protection Commission and puts it into his version of Dodd-Frank, which is this sprawling, multifaceted legislation that looks at derivatives and mortgages and this omnibus thing that includes everything in one section of it was the Consumer Financial Protection Commission. But this is the central issue. The question is, do you continue consumer protection as it has been? That is, is consumer protection to be left in the hands of agencies for whom it has been and will continue to be a secondary concern at best? That would do more or less what Elizabeth Warren and Professor laid out in her paper. It's kind of an obscure academics fantasy that an academic paper like this could become so real so fast. I've had that same thought. I mean, how many of these papers are written? It's called Democracy. I've never even heard of this journal. How many papers are written that are perfectly valid ideas and maybe even great ideas that just sit on a shelf. Sometimes it's timing. She wrote it a year before the financial crisis. The consumer agency that we propose would have consumer protection as it's major concern. In fact, it's only concern in terms of its enforcement. And what sort of powers is this new bureau given in the wake of the financial crisis by Congress as it's being created? I mean, it's always just remarkable powers. It's a strong single director rather than a five person commission as it was originally conceived. Elizabeth Warren and Professor talked about a commission, a five person commission that would have to debate every big decision and sometimes their

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