The fits and starts of American politics are sometimes blamed on a fickle public, demanding action at moments of crisis or calamity only to lose interest as soon as an issue fades from the headlines. That's a bum rap where financial reform is concerned. While Washington has had trouble staying on course, a new poll finds the electorate maintaining a strong and steady commitment to the task.
On the fifth anniversary of the financial meltdown, the Center for Responsible Lending and Americans for Financial Reform (where I work) jointly released the results of a nationwide telephone survey of likely voters conducted earlier this summer by Lake Research Partners. Regulating financial services and products is seen as either "important" or "very important" by more than 90 percent of voters, the survey found. It's an overwhelming sentiment, and one that cuts across party lines: 96 percent of Democrats regard financial regulation as important, but so do 95 percent of independents and 89 percent of Republicans.
The crimes and excesses of Wall Street no longer transfix the nation as they did in late 2008, when each new day seemed to bring word of another blue chip institution's looming collapse. The current state of affairs is more debilitating than dramatic, with tens of millions of families struggling to remake lives worn down by some combination of lost work, income, housing, wealth and hope. But no one has forgotten where these troubles began, and so it is hardly surprising, but very much worth noting, that the financial world remains a focus of wide and deep popular distrust, with the great majority of Americans advocating more government action, not less.
The Lake survey found 83 percent of voters favoring tougher rules for Wall Street financial companies, while just 9 percent thought that "they have changed enough that they don't need further regulation." Beyond this general verdict of approval, voters expressed strong backing for the work of the new Consumer Financial Protection Bureau (known as the CFPB), and for specific consumer reforms. More than 85 percent said that banks should have to decline a debit-card purchase if a customer's account doesn't have the funds to cover it. Nearly 90 percent agreed that small-dollar lenders should have to verify a borrower's ability to repay before issuing a loan.
At last count, federal rulemakers had missed about 60 percent of the deadlines handed them by the Dodd-Frank Act of 2010. Three years after that law's enactment, watchdog agencies are still dickering over the Volcker rule, which was supposed to keep banks from playing speculative games with taxpayer-backed funds. They have yet to do anything to clean up the corrupt business model of the credit rating agencies, which slapped their seals of approval on untold billions of suspect securities.
Meanwhile, the financial industry has won striking sympathy on Capitol Hill for a campaign to undermine the CFPB's authority and independence. Until a confirmation logjam was finally broken in July, a bloc of more than 40 Senators had spent two years refusing to vote on a nominee (any nominee) to lead this agency, because of what they claimed were its vast and dangerous powers.
Unsurprisingly, a significant number of voters (40 percent, according to the survey) have not yet heard of the Bureau or have no strong opinion of it. That said, 67 percent of Republicans, along with 89 percent of Democrats and 76 percent of Independents, approve of the stepped-up oversight of mortgage brokers, payday lenders, debt collectors and other previously unregulated industry players that the CFPB watches over.
Presented with two opposing views of the CFPB, 64 percent of voters voiced support for the idea of an agency charged with protecting consumers against dangerous financial products. By contrast, only 26 percent were more inclined to view the CFPB as an example of expensive, unneeded federal bureaucracy. Republicans split more closely on this one, favoring the pro-CFPB answer by just 46-45 percent. Even so, the survey found no evidence whatsoever of the kind of over-the-top hostility that led South Carolina Senator Lindsey Graham, for example, to describe the CFPB as "something out of the Stalinist era."
There's a serious disconnect here. For several decades, corporate-friendly forces have bad-mouthed regulation as an economic burden and a "job killer." Yet it turns out that Americans readily embrace both the idea of regulation and the word itself when the context is the financial industry. Asked to choose between more and less regulation of financial companies, 71 percent of voters went with more, and 20 percent with less. The margin of difference actually narrowed – to 51-39 percent – when this question was rephrased using the softer term "oversight" instead of "regulation."
Why does financial reform run into such powerful headwinds in Washington? The answers are clearly not to be found in any survey of public opinion. Better to look at the heaps of campaign money bestowed on legislators of both parties, the innumerable meetings between industry lobbyists and regulators and the other visible signs of a relentless, though largely subterranean, industry juggernaut against reform.
In any case, it's not the American people whose commitment has been shaky.
Jim Lardner is the communications director at Americans for Financial Reform, a coalition of more than 250 civil rights, consumer, labor, business, investor and other groups working for a strong, stable and ethical financial system.