“The Optics Are Bad”

From the NYT:

“Banks and mortgage lenders are placing top priority on killing President Obama’s proposal to create a new consumer protection agency that would regulate home loans, credit card fees, payday loans and other forms of consumer finance.

The Obama administration fired an opening shot on Tuesday, sending Congress a detailed, 150-page proposal for an agency that would set new standards for ordinary mortgages, restrict or prohibit risky loans, investigate financial institutions and enforce new laws aimed at protecting credit card customers.

“This agency will have only one mission — to protect consumers,” said Timothy F. Geithner, the Treasury secretary, in a written statement on Tuesday.

But industry executives vowed on Tuesday to fight Mr. Obama’s plan with everything they have, even though banks are still heavily dependent on many taxpayer-supported loans and loan guarantees to get through the crisis. (…)

Bank executives said they knew they faced a difficult political fight, given the soaring number of homeowners facing foreclosure.

“We know the optics are bad,” said Scott Talbott, vice president for government affairs for the Financial Services Roundtable, a trade association in Washington. “If you are against a consumer regulatory agency, then everybody will say you’re against consumer regulation.””

I suppose that when your industry has come up with such gems as the liar loan, helped bring the entire financial system to the brink of ruin, and helped bankrupt not just the people who took out those loans but people who had nothing to do with them — people were laid off because of the crisis you helped create — and when, after all that, you decide to oppose regulation of consumer financial products, you might say that “the optics are bad”.

Here’s some more bad optics:

“Gabby Ornelas, a former teller at the giant Bank of America Corp., remembers the training sessions. And she remembers her marching orders: “Sell, sell, sell.”

Ornelas was instructed to use her Spanish language skills and Latina heritage to sign up customers for as many kinds of banking services as possible, she said — services that led to lucrative fees for the bank and financial entanglement for many customers.

“We were coached every day to push multiple checking accounts, credit cards and debit cards even when the customer didn’t understand how to use them,” said Ornelas, who lives in Landover Hills, Md., a town with a large immigrant population and a per-capita income of less than $19,000.

In one case, she described a Central American mother of three who came back to see her at the bank, distressed about $300 in overdraft fees incurred after Ornelas persuaded the woman to open a second checking account. (…)

The former workers said they were going public to lay out what they saw as a little-known side of BofA’s business model: encouraging working-class customers to sign up for high-interest-rate credit and cash advance services and structuring an array of check and debit card services to maximize overdraft fees and other charges.”

I can see why people who engage in those kinds of practices — or these, or these — might be leery of a consumer protection agency. What I can’t see is why the rest of us should listen to them. They had their shot at policing themselves. If they wanted to avoid regulation, they should have taken it. They didn’t. To my mind, they have long since forfeited the right to complain.