Banks Will Say 'Up Is Down' to Make a Buck

The American Bankers Association is lobbying hard to kill the consumer protection agency, arguing that separating consumer protection from "safety and soundness" regulations would destabilize banks. Which might be a more credible argument, had they not made the opposite one in a 2006 memo, notes TARP oversight chair Elizabeth Warren, in a Politico op-ed. “If there is a smoking gun in the battle over financial regulatory reform, the 2006 ABA memo is it,” she writes.

That memo also argued that nontraditional mortgages weren’t “inherently riskier” than traditional ones, and that “prudent lenders” could manage what risks there were. We know how that turned out. The only consistency in ABA’s 2006 position and current one is that it resists meaningful reform. “If saying down is up or up is down” will block reforms, “then the ABA lobbyists are willing to say it.” (More Elizabeth Warren stories.)