New Orleans The bill was passed and in the “instant” history it looks big, so let’s be positive about all of this.  There are some good things in the mess, even as other issues went unaddressed or were silenced (like putting Community Reinvestment under the new CFP Bureau!).  Non-banks which escaped CRA requirements and virtually any regulations will have to toe at least some lines.  Regulator shopping for the fed that fit most easily in a bank’s pocket will be harder.  There will at least be some genuflecting in terms of the citizen consumer and protection of citizen wealth, rather than only worshipping at the altars on Wall Street.  In short we should be happy with something because it’s better than nothing.

Nonetheless, for citizens downstream the Washington Post graphic pretty ably shows how empty the suit is.  Articles throughout the Times and the Wall Street Journal are clear that banks are now having their way in the regulation writing wars and planning elaborately how to pass off costs and risks back to consumers.  The real hope of the CFPB is that the regulations will have enough teeth to provide real protection.  That has certainly not been the history of regulation under the Federal Reserve and their role in regulating Community Reinvestment is a case study in point, where everything has been weakened in the last 30+ years and many bank agreements to meet CRA standards have simply been ignored and overlooked.  Even though a separate fiefdom within the Federal Reserve, there are no guarantees that they will have the freedom to do what needs to be done.

A battle has been won, but the war continues on, and unless we are ever vigilant, this is could be a very hollow victory if we are not able to keep the devils out of the details.