You’ve got to hand it to President Barack Obama’s expected Fed picks – they have some strong consumer credentials.
Peter A Diamond co-wrote a book with Peter Orszag, now OMB director, on saving social security. The book, first published in 2004, suggests only minor reforms, and makes clear that social security needs saving as much from its reformers as from the deficit expected in 2042.
Restoring long-term balance to Social Security is necessary, but it is not necessary to destroy the program in order to save it…Our purpose is to save Social Security both from its financial problems and from some of its ‘reformers.’
His comments came amid a major attack by the Bush administration on social security, when, in an attempt to privatise America’s most successful social programme, the spin was that social security would be ‘bankrupt’ in 2018, the date when – after decades of running a surplus – the programme would start using the surplus to make payments (rather than 2042, the date the fund would be exhausted and payouts would fall about 25 per cent short of promised payouts).
Mr Diamond seems to have little patience for those arguments.
Some observers have argued that the problem arrives much sooner than that, when the flow of revenue from taxes first falls short of annual expenditure in 2018. We see no basis for attaching any significance to such a date, however, and are unaware of any rigorous presentation of an argument for why that date represents a crisis.
And Sarah Bloom Raskin won the Maryland Consumer Rights Coalition’s Consumer Advocate of the year award.
From the release:
Commissioner Bloom Raskin, who is being honored as Consumer Advocate of the Year, has undertaken bold and aggressive steps to improve the effectiveness of her office, enhancing investigative and administrative tools to enforce Maryland laws governing the credit industries. She has also been outspoken on the value of state regulation of the credit industries and standards of corporate ethics.
Indeed, Ms Bloom Raskin chided Congress for fighting states who were trying to enact meaningful reform in 2009 testimony.
Despite these enforcement and legislative successes, state actions have been hamstrung by the dual forces of preemption of state authority and lack of federal oversight. The authority of state banking commissioners to craft and to enforce consumer protection laws of general applicability was challenged at precisely the time it was most needed – when the amount of subprime lending exploded and riskier and riskier mortgage products came into the marketplace. The laws passed by state legislatures to protect citizens and the enforcement actions taken by state regulators should have alerted federal authorities to the extent of the problems in the mortgage market and should have spurred a dialogue between state and federal authorities about the best way to address the problem. Unfortunately, this did not occur.
Of course, this was after Ms Bloom Raskin was working at the state level. As a Congressional aide, in at least one case, she pushed for a consumer-industry consensus before asking Congress to enact mortgage consumer protection law reform. According to a 1997 article in Real Estate Finance Today:
Congress legislates best when there’s an alignment of the stars…If there’s a lack of consensus…no legislation might be better than the legislation you actually get.