CFPB Turns Two with a Bang – What Now?

The Consumer Financial Protection Bureau (CFPB or the Bureau) hit its second birthday this week in grand style. Has it really been just two years? I don’t believe I would be in minority in feeling CFPB has been around much longer given all the Dodd-Frank rules it has cranked out and all the press it has received over the controversial recess appointment of Rich Cordray in January 2012. But, who’s counting, right?

Speaking of Rich Cordray, his recent formal Senate confirmation was perhaps the biggest birthday present of all to the Bureau. Majority Leader Harry Reid (D-NV) had to threaten the Senate with the “nuclear option” (a change of Senate rules to allow “majority” rule) over several stalled Obama nominees to key administration positions.  The Senate was close to DEFCON 1 before a handful of Republicans told Harry to take his finger off the button because they would allow votes on the nominees. Cordray was the first nominee to get confirmed. House and Senate republicans have been pressing for structural changes to CFPB pretty much after the ink was dry on the Dodd-Frank Act. Senate Republicans were united in 2012 and 2013 that no CFPB Director nominee would be confirmed unless the CFPB became a commission (like the FTC or FCC) and received its appropriations from Congress and not the Federal Reserve. Two federal courts even called into the question the “recess” appointment of Cordray as they ruled that President Obama’s recess appointments to the National Labor Relations Board were unconstitutional. The Supreme Court even agreed to hear the case in October. All this legal uncertainty is fairly moot given the Senate’s confirmation (and the Supreme Court’s recent proclivity to threading the needle on touchy constitutional issues).

But, enough about history. What does the future hold for the Bureau? I don’t buy quite into the hype by some that the Bureau is coming out swinging against banks now that Cordray has lost his “recess” tag. I expect the Bureau will be sensitive and responsive to the concerns from Capitol Hill. It will certainly be responsive to the Government Accountability Office (GAO) as it begins to examine its data collection practices. As requested by Sen. Mike Crapo (R-ID), ranking Republican on the Senate Banking Committee, GAO will review identity, account and transaction data the Bureau collects during its supervision of banks or through other direct request. The Bureau claims that the transaction data is de-linked with any personally-identifiable information. We’ll see what GAO comes up with (presumably in 2014).

The Bureau also released its updated regulatory agenda through the end of the year. Expect to see a notice of proposed rule-making on extending Reg E protections to general-reloadable prepaid cards in addition to new proposed rules on debt collection and payday loans. I suspect CFPB will continue to tinker with the Dodd-Frank mortgage rules to take effect in January 2014. It certainly doesn’t want to be tagged with tanking the housing market if no one can get a loan. If you really want to peer into CFPB’s future, follow its consumer complaint portal progress reports. CFPB has stated that the trends it sees through the complaint portals will drive its enforcement and regulatory agenda.

Industry and CFPB need to work together more than ever to ensure balance is struck between consumer protection and a healthy financial services industry. Consumers are hurt if the pendulum swings too hard one way. Keep checking with this blog for progress reports. 

Handicapping the CFPB in 2013

2013 began with a bang for the Consumer Financial Protection Bureau. In January, the Bureau released several mortgage-related final rules as mandated by the Dodd-Frank Act. The mortgage industry has been in a mad rush to put together webinars to detail ability-to-repay, appraisal reform and high-cost mortgage requirements. It is not an exaggeration to note these mortgage rules consumed much of the Bureau’s bandwidth in its brief existence.

So, just as the Bureau comes up for air, it gets rocked by an somewhat related court case concerning another federal agency, the National Labor Relations Board. How are the two agencies connected by this court case? Let’s hit the rewind button.

It’s no deep Washington secret that current presidents are having a more difficult time getting various federal nominees through the US Senate. It’s also no secret that modern presidents have utilized “recess” appointments more and more (as permitted by the U.S. Constitution). Enter the controversial CFPB and the quest to have the Senate confirm a Director as required by Dodd-Frank. The Bureau existed for almost 18 months without a confirmed Director. Elizabeth Warren ran the CFPB during its incubation period as a special advisor to the President. Having a director in place was important to the Bureau because it would assume certain authority (such as the authority to supervise non-bank entities like debt collectors and credit bureaus) only with a confirmed Director.

It became very apparent to President Obama and others the Senate would not have 60 votes necessary to bring the nomination of Elizabeth Warren to the Floor for a vote. In 2011, President Obama nominated former Ohio Attorney General Rich Cordray to be the CFPB Director. The Senate Banking Committee approved Cordray’s nomination out of committee, but many Republican senators wanted to consider structural changes to the CFPB before moving on Cordray’s nomination. For example, altering the Bureau from control by a single Director to a five-member commission. And making the Bureau subject to annual Congressional appropriations versus receiving its funding from the Federal Reserve. Senate Democrats believe the Bureau is just fine as Dodd-Frank created it, so Cordray’s nomination was at a stalemate in the late stages of 2011.

On January 4, 2012, President Obama rolled the dice. Believing the Senate was in “recess,” the President appointed Cordray as the director of the CFPB. At the same time he made recess appointments of three nominees to the NLRB. The legal community hit an uproar shortly thereafter on both sides of the issue. In April 2012, a Washington state-based company, Noel Canning, was the lead plaintiff in the case against the Administration’s NLRB recess appointments. In January of this year the U.S. Circuit Court of Appeals (DC) unanimously ruled against President’s Obama recess appointments to the NLRB.

The three-judge panel declared the Senate remained in “pro forma” sessions when the appointments occurred and was not technically in recess. The Obama Administration announced its intention to appeal the ruling to the U.S. Supreme Court. The NLRB decision called into question the validity of Richard Cordray’s recess appointment to be the CFPB Director. The Cordray question is being addressed in a separate lawsuit still pending before another court. On January 24, 2013, President Obama announced his decision to re-nominate Cordray as CFPB Director subject to Senate confirmation. Congress will consider legislation again in 2013 to alter the Bureau’s structure (five-member commission as opposed to a single director) and subject the Bureau to annual Congressional appropriations.

So, where does this leave the CFPB in 2013? I doubt the Bureau will be affected much at all in the short term. It will continue on with its examination of banks and non-banks. It will take some high-profile enforcement actions. It will put forth some challenging proposed rules on overdraft protection and general purpose prepaid cards. Even if the district court decides Cordray’s appointment was unconstitutional sometime in 2013, the appeals process could take years. Will the court strike down all the Bureau actions and rules taken while Cordray served as Director? And, what of the fate of Cordray? This is the biggest unknown. Will the Senate confirm him without any changes to the Bureau itself? Does he leave at the end of 2013 as his recess appointment expires and Obama puts forth another nominee?

If you have answers to these questions, go buy a lottery ticket quickly.

CFPB Update

The 112^th Congress may be winding down, but the Consumer Financial Protection Bureau (CFPB) keeps chugging. Before Congress scurried off home for electioneering in September, CFPB Director Richard Cordray paid a visit to both the Senate Banking Committee and House Financial Services Committee for a biannual update on the Bureau’s activities. House Financial Services Committee Chairman Spencer Bachus (R-AL) even quipped that Director Cordray “made some news” during his appearance on September 20. Yes, it’s news when an Administration official appears before Congress and says something of interest.

The Consumer Financial Protection Bureau is poised to
issue two important proposed rules on overdraft
protection and prepaid cards.

What did Cordray say of interest? At issue is the 2009 CARD Act’s “ability to pay” rule. The Federal Reserve Board had responsibility for the implementing this provision of the CARD Act (the CFPB had not existed at this time). The Board created a uniform standard requiring all consumers to demonstrate “an independent ability to repay.” The Board’s rule took effect October 1, 2011 and almost immediately Congress began asking questions on the rule’s impact on stay-at-home spouses and their ability to obtain credit. Dodd-Frank gave the CFPB rule-making authority over Regulation Z (Truth in Lending). At another House Financial Services Committee hearing during the summer, Gail Hillebrand of the CFPB did not appear very sympathetic to opening up the rule again. But Cordray believe enough evidence had been produced to warrant a new rule that would disadvantage stay-at-home spouses who may ample “household income” to secure credit. CFPB will likely issue the revised rule for public comment later this year or early 2013.

Senate and House leaders also expressed concerns with CFPB’s final rule on international remittance transfers (Sec. 1073 of Dodd-Frank). Several House members wrote Cordray in August asking for a delay in the effective date (February 2013) while the CFPB studies its impact on consumers. The CFPB’s rule on international remittance transfers required several disclosures to be made to consumers including exchange rates and fees charged by other entities and taxes to be charged by foreign governments. The only relief CFPB has given to exempt those financial institutions providing less than 100 remittances annually from the new disclosure rules. I do not expect this will be the last we hear of this issue. How far will consumer choice be limited as institutions exit the business because compliance requirements are not financially viable? Stay tuned.

Looking ahead to 2013, the CFPB is poised to issue two important proposed rules on overdraft protection and prepaid cards. EFTA has provided comment to the Bureau on both subjects in 2012 as part of an Advanced Notice of Proposed Rule-Making. Gov. Mitt Romney also called out the Bureau for slow progress on issuing rules on qualified mortgages. Expect some busy beavers in the hallways and offices of the CFPB in the weeks and months ahead.

The Boys are Back in Town

After a five week recess, two party conventions and a nasty Gulf hurricane, Congress is back in session on September 10. How long will they stick around? What can they do before taking off to campaign back home? [Quick fact: The boys may be back in town, but women currently constitute 17% of the 112^th Congress. Apologies to Thin Lizzy.]

At most, Congress will be in session three weeks with a scheduled adjournment date of October 5. The only “must do” agenda item is to pass a measure to fund the government when the new fiscal year begins October 1. At this writing, no individual appropriations bills have been sent to the President’s desk for signature into law. No one is even sure if a lame duck Congress can agree on 2013 spending levels. The budget can could be kicked into early 2013 and a new Congress. It’s happened before in recent years. The only positive news here is that the House and Senate agreed to the temporary funding measure back in July.

When we last saw the Senate in session, no agreement could be reached to move forward on comprehensive cyber-security legislation. News reports popped up periodically in August that some Senators believed a deal could be reached in September. Count me in the doubtful column. We do know, however, the Obama Administration is actively considering either a revised Homeland Security Presidential Directive 7 or an entirely new executive order on cyber-security. PaymenTrends will keep close tabs on all things cyber. We should also bear in mind that Congress may be in and out of session with a blink of an eye, but federal agencies such as the Consumer Financial Protection Bureau remain open for business. CFPB is currently digesting public comments on overdraft protection and prepaid cards (just to name two).

I do want to give a “shout out” to one piece of legislation that has passed the House of Representatives 371-0 and that has more than 60 Senate cosponsors. This legislation (H.R. 4367/S. 3204) would eliminate the requirement that an ATM need a physical placard fee notice to accompany the on-screen fee notice to a consumer. This is one issue where Republicans and Democrats have united behind common-sense legislation to eliminate a burdensome and unnecessary regulation. The Senate needs to act on S. 3204 before leaving for home in October.

EFTA’s Legislative & Regulatory Council will be tackling all these issues (CFPB, ATM signage, overdraft protection, cyber-security) this September 27 in Washington DC. Speakers include Stuart Pratt, President & CEO of the Consumer Data Industry Association, Nicole Muryn, director of regulatory and legislative affairs for BITS and Catherine Galicia, counsel to Chairman Tim Johnson of the Senate Banking Committee.

Coming to Grips with Overdraft Protection

The Electronic Funds Transfer Association has put together a task force of industry veterans to tackle the tough issue of overdraft protection. The task force's mission is to focus on the legal and operational issues of extending overdraft protection.

In a quick, three-minute video, Kurt Helwig, president and CEO of EFTA talks about the issue.

Time's Running Out to Comment on the Impact of Overdraft Protection

June’s end also marks the end of the Consumer Financial Protection Bureau’s extended comment period on the impacts of overdraft programs on consumers. What’s CFPB’s end game here? Will ATMs and point-of-sale (POS) devices need to deliver a real-time “insufficient funds” warning to consumers before a transaction causing an overdraft takes place?

The CFPB’s notice for comment on overdraft is fairly sweeping in scope. Questions range from quantifying overdraft opt-in rates, the economics of overdraft programs and long-term impacts to consumers. Of particular concern to EFTA members are questions related to consumer alerts and balance information. EFTA membership hits all the touch points of a shared network transaction: the bank, the processor, the network switch, card processor and host processor. If the CFPB were ever to require some type of overdraft notification at an ATM or POS, EFTA members would be in ground zero for compliance.

But, let’s not get too ahead of ourselves here. EFTA will provide the CFPB with comments before the June 29 deadline. Though not finalized, EFTA will emphasize three main points in the comment letter:

·       Most POS devices at retail stores or gas pumps currently lack the ability to deliver any meaningful message to the consumer with respect to a possible overdraft occurrence

·       ATMs are a bit more sophisticated than POS terminals but, again, delivering an overdraft notice message in a shared network transactions (versus on us) is challenging

·       A greater burden will be placed on community and independent banks versus the larger institutions

Once the comment period closes on June 29, the CFPB will take several weeks (probably months) to read over and formulate a proposed rule on overdraft protection. At this writing, the CFPB has received more 235 comments (see them here at regulations.gov). EFTA’s final comment letter will be posted soon.

You’re Going to Need a Bigger Boat

For some reason, I cannot shake this classic line from Jaws (uttered by Chief Brody to Quint upon first seeing the shark) when I read the daily comings and goings of the Consumer Financial Protection Bureau. The question is not who or what the Bureau is attempting to regulate. But, who or what aren’t they wanting to regulate. Or, so it appears.

Like it or not, the Bureau is around to stay. It’s still in its infancy, but growing bigger and more powerful by the day. The Bureau hit a major growth spurt when President Obama recess appointed Richard Cordray to be its first director (controversially I might add). Since January, the Bureau has been one active federal agency. And, it’s not even fully staffed yet.

Here’s a quick, non-exhaustive run-down on the Bureau’s recent activities:

·       Request for Information on overdraft practices

·       Examination of overdraft programs at the largest nine financial institutions

·       Advance Notice of Proposed Rulemaking on General-Purpose Reloadable Prepaid Cards

·       Proposed Rule for Supervision of Nonbanks that Pose Risks to Consumers

·       Proposed Rule on express statutory protections of confidential information in bank examinations

·       Notice for Comment on updating and streamlining regulations

·       Proposed Rule to supervise debt collectors and consumer reporting agencies

Ready to cry “uncle” yet? One can certainly make the case the Bureau is so active because it is so young. But, is haste making waste? Case in point may be the Bureau’s final rule on international remittance transfers issued late last year. The Bureau assumed responsibility for the final rule from the Federal Reserve Board (who had issued the proposed rule). Without going into a detailed analysis of the final rule, many banks providing remittance services are stating the 2013 compliance date for new consumer disclosures and error resolution cannot be achieved. The message appears to be getting through to the Bureau. It may revisit the issue in some fashion.

We ought to be somewhat sympathetic to the Bureau and other federal banking agencies under strain to implement the more than 400 rules and studies required by Dodd-Frank. The Bureau must also find its way in working with the Fed, the OCC, FTC etc on bank examinations and enforcement actions. The Bureau must balance its requirements and obligations under Dodd-Frank against being spread too thin and possibly hurting the financial services industry’s ability to help the economy recover.

Does the Bureau go for the “bigger boat” option or focus on issues beneficial to consumers and the recovering economy? Time will tell.

Director Cordray's Coming-out Party

Late last month I attended the Consumer Bankers Association conference where Consumer Financial Protection Bureau Director Richard Cordray gave his first speech before a large industry group.  Unlike his pseudo-predecessor Elizabeth Warren, both he and his remarks came across as reasonable and measured.

Mr. Cordray stated that the overarching goal of the Bureau is to make sure that the consumer is protected no matter what kind of financial product or service is being offered. He focused on the need for clear and concise disclosure and told his audience of mostly bankers that the Bureau will seek to level the playing field between banks and non banks. This will be accomplished by among other things, requiring simple and clear communication and disclosure to the consumer.

His most encouraging remark came in response to a question about bank profitability when he answered,  "Banks not only have a right to profit, but the market won't work without it".  Would that other members of this Administration believe, or at least say something similar.

To those involved in the financial services industry Director Cordray's presentation was more Mom and apple pie than anything. Which in itself is a nice break from Professor Warren. Time will tell if his actions ( or should I say enforcement actions) match his words.

Given the political genesis of the Bureau, there are likely to be big headlines and high profile CFPB enforcement actions in advance of the November elections. The timing on this will be purely coincidental.

Dueling Piano Players

Anyone who has been to New Orlean's French Quarter, San Antonio's Riverwalk, or any of a number of other tourist traps, er, destinations, is familiar with the dueling piano players. These are musicians who took Billy Joel's Piano Man way too seriously. They set up shop with a couple of grand pianos in bars and play a series of pop songs, show tunes, naughty nursery rhymes and other ditties that well liquored tourists sing along to. It's a non-techno version of karaoke.

So we had dueling piano players this week in the Senate Banking Committee following the Democrat's unsuccessful vote to break the Republican's filibuster over the nomination of Richard Cordray to head the new Consumer Financial Products Bureau.

First up was the ever intemperate Dick Durbin (D, IL) who chairs the Banking Committee. Sen. Durbin decried the Republican's successful filibuster of Mr. Cordray's confirmation. In full throat and a belligerent baritone Sen. Durbin rounded up the usual suspects on which to pin the blame: "...the big banks and their backers in Congress have done all they can to hamstring [the CFPB] and prevent it from having the tools and leadership necessary to be an effective consumer watchdog."

Not so! Not so! mellifluously sang Alabama's Richard Shelby, the ranking Republican on the Committee chaired by Sen Durbin. On the Senate floor he sang a woeful tale of a Bureau with nearly unlimited power, funding that amounts to a virtual unchallenged blank check, and a Titan director to whom lesser gods would answer.

"It should be common sense that the more power an agency has the more accountable it needs to be," sang out Sen. Shelby.

But in a second verse, Sen. Durbin accused his opposite number and the Republican conference of voting "to protect the status quo rather than...putting consumers interests first."

Not to be outdone Sen. Shelby's baleful rejoinder told of the need to broaden the governance of the Bureau by replacing the sole Director with a Board of Directors and to make the funding of the agency more transparent and less CIA-like. " In light of the reasonableness of the reforms we have requested, the question remains: why are the Administration and the [Democrats] so insistent that the Bureau be unaccountable?" he crooned. 

I think I can answer that. The Administration and the Senate Majority have little faith that the American people know what's in their best interest. They believe that consumers need a deus ex machina, on standby 24/7, to swoop down and save us from ourselves.

I'll go even further. I think the CFPB shows how little respect some in Congress have for the American people and, frankly, for the institution of the Congress itself. By their design of the agency and by their attempt to jam Richard Cordray through the confirmation process, they are telling American financial consumers and their elected representatives, we're going to put a bunch of smart people in a room and they're going to figure all this out. Don't bother your pretty little heads about it.

Well, we don't need more regulation and we don't necessarily need less regulation. We need the right regulation. And a bunch of smart people unanswerable to the institution of the Congress and led by a Director answerable to no one ain't it.

And the boys and girls gathered round Sen. Shelby's keyboard don't get a pass here. Granted, there's nothing more limiting than being the minority party in the House or Senate, but they're in the minority right now for a reason. They were sent to Washington to govern, not to tickle their keys.  This he sang-she sang, dueling piano routine gets old fast.

So pardon me if I don't stick around. I'll do my drinking elsewhere. Maybe a little dive where there's an old guy with 12 teeth and a beat up Gibson belting out the blues from somewhere between his gut and his heart.

That's my opinion. What's yours?

ATM Fee Disclosure: Updating Regulation to Limit Jackpot Justice

   In July of this year Kurt Helwig, president and CEO of the Electronic Funds Transfer Association and Dennis Ambach, director of the Association's Legislative and Regulatory Council, met with the staff of the House Financial Services Committee regarding a regulation that requires ATM owners to display a sign specifying the fee charged to use the machine. There has been evidence of unscrupulous gold diggers ripping the fee signs off of ATMs and then attempting to file class action lawsuits against the owners of the ATMs for failing to post notice of the fees. There are even websites that troll for alleged victims and encourage the filing of these suits.
   Members of the EFTA, which represents a wide spectrum of companies involved in electronic payments, believe that the sticker requirement is an antiquated requirement since modern ATMs post the fee on the ATM screen and ask the user whether he wishes to accept the fee before continuing. They are joined in this belief by members of various other groups including the ATM Industry Association (ATMIA).
   Following the July meeting the Committee's chairman, Rep. Spencer Bachus (R, AL) wrote to Raj Date, a special advisor to Treasury Secretary Tim Geithner and the interim head of the new Consumer Financial Protection Bureau. Chairman Bachus asked whether the CFPB has the authority to amend Regulation E of the Electronic Funds Transfer Act to eliminate what amounts to dual notification.
   The CFPB recently published what the government calls a "Notice for Comment." This is an invitation for the public to comment on some pending regulatory action. In this case, the CFPB is looking for public input on regulations that fall within the Bureau's authority and which could use a little streamlining. Specifically, the CFPB is looking for regulations which it has "inherited" from other regulatory bodies, and which could be updated or modified because they are "outdated, unduly burdensome or unnecessary."

HFSC Chairman Bachus contacted
 the CFPB concerning its authority
to amend the EFT Act to
eliminate dual notification

   Among the suggested areas for comment in the Notice is ATM fee disclosure. The Bureau is looking for comment on whether the requirement to post a sign on the ATM should be eliminated and whether other disclosures, such as the on-screen fee notice, are adequate for informing consumers.

   The Bureau's desire to quickly identify the regulations for which it is now responsible and to streamline those requirements is welcome news. How the newly minted CFPB manages this comment period and deals with the public comment will go a long way in establishing the Bureau's credibility with consumers and with industry.
   In you are interested in commenting to the CFPB on this issue the comment period is open for 90 days. It's hard to believe that we can't find a way to ensure that consumers' rights to know upfront the cost of using someone's ATM can't be balanced with the right of that ATM owner to avoid financial calamity through the jackpot justice of frivolous lawsuits.
   That's my opinion. What's yours?

  

Vita secundum Barney

   Life after Barney. The financial services industry now faces the uncertainty of dealing with the all-important House Financial Services Committee without Massachusetts' Barney Frank as chairman or ranking member.
   To figure out where we're going without Rep. Frank we need to look at how we got here with him. This is not meant to be a Barney bashing. Truth be told, even most conservatives would give him credit (probably grudgingly so) for being one of the more intelligent, articulate and passionate Members ever to sit on, or chair, the Committee. The Dodd Frank financial overhaul bill, loathed by conservatives, owes its existence to Rep. Frank's legislative and parliamentary skills, which allowed him to skipper the bill through a discordant House of Representatives.
   Barney Frank's quick wit powers a sharp tongue. He is a larger-than-life human sound-bite machine, making him a darling of the media. But his sharpness, unfortunately, also has made him a polarizing figure. And while it's difficult to envision him losing a reelection campaign in 2012, even with redistricting, let's face it: After 32 years in Congress he would have had a lot to answer for.
   And at the head of that list would have been his virtual protectorate over Fannie Mae and Freddie Mac. "I do not want the same kind of focus on safety and soundness," he said flatly in 2003, referring to the regulation of Fan and Fred, "that we have in the office of the Comptroller of the Currency and the Office of Thrift Supervision." Rep. Frank went on to say that he wanted to "roll the dice a little more" in loosening up lending requirements for government-backed loans.
   It was this perception of a willingness to sacrifice the financial well being of Fan and Fred in order to put more people, qualified or not, into houses, that made him a target of conservatives. More than that, say conservatives, it was his unwillingness to admit that this roll of the dice had contributed to a complex web of liar loans, credit default swaps and mortgage backed securities that helped collapse the housing market and with it the greater economy.
     So where do the Committee and Congress go after Barney? One place might be a second look at the Consumer Financial Protection Bureau. Rep. Frank successfully fought attempts by moderate Democrats to make the planned agency less independent. With him gone those Democrats may be more likely to join with Republicans seeking to recast the agency.

      Without Rep. Frank the Democrats will tap one of theirs to be the new ranking member (or Committee chair in the unlikely event they are able to re-take the House in 2012). 

   The heir apparent, based on seniority is Rep. Maxine Waters of California. However, she faces two hurdles within her caucus that could preclude her.

   First, she is currently embroiled in a fierce ethics investigation. Rep. Waters continues to be hounded by allegations that she used her juice as a member of the Committee to direct federal bailout funds to a bank in which her husband owned stock. Ms. Waters maintains her innocence in the matter. The case is currently with the House Ethics Committee, which is waiting on a review by outside counsel. Even if she's exonerated the thought of Maxine Waters with a gavel in her hand may make moderate Democrats duck for cover. 

   Second, standing in the way of Ms. Waters' ascendancy may be her fiery Bonnie-and-Clyde anti-bank rhetoric. Being pro-consumer isn't necessarily to be anti-bank. In fact, bankers may not have liked Barney Frank's bluster, his politics, or his sarcasm; however, those who understood the workings of Congress respected his understanding of their complex line of work.

   Ms. Waters, on the other hand, has equated bankers with gangsters. Her solution to the mortgage crisis? Congress should "tax (banks) out of business" if they won't re-negotiate consumer mortgages. Ms. Waters has already started to campaign for the top Democrat seat on the panel. However, I doubt many Democrats, most of whom would hate to see any more banks fail in their districts, are willing to sign onto her slash-and-burn Chavista banking policy.

  In the end the ranking member of the Committee may not matter much, since there are few things in this world as irrelevant as the minority party in the U.S. House of Representatives.  However, nothing would deepen this irrelevance as much as having an ethics-tainted firebrand as the Democrats' ranking member. The party might do better to look at a Committee member like Carolyn Maloney of New York if it wants to have any chance of being an active partner in financial policy in 2013 and beyond.

   That's my take. What's yours?