Campaign Promises

Cabinet/Departments -> Treasury -> Regulatory Reform

Regulatory ReformGrade
The Promise: "...a critical step in restoring fiscal discipline is enforcing pay-as-you-go (PAYGO) budgeting rules which require new spending commitments or tax changes to be paid for by cuts to other programs or new revenue."
When/Where: Obama-Biden Plan for America "Blueprint for Change" dated 10/09/08.
Status:Without fanfare, President Obama signed the Statutory Pay-As-You-Go Act of 2010 into law on 02/12/10. The basic premise of PAYGO is that any new spending or tax relief is to be offset through reductions in spending elsewhere or increase in other taxes in order to hold the national deficit at bay.

The law also raised the government's debt ceiling from $12.4T to $14.3T. Since signing the PAYGO bill, new spending measures such as the American Protection and Affordable Care Act of 2010 signed into law on 03/23/10 (and its counterpart Health Care and Education Reconciliation Act of 2010, signed into law by President Obama on 03/30/10) are not offset by "reductions in spending elsewhere".

Under the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 (H.R. 4853) signed into law by President Obama on 12/17/10, there are no PAYGO provisions for tax cut extensions for those earning more than $250K ($200K for single tax filers).

So, the typical American citizen considers that PAYGO, as signed into law, is ineffective as a means to balance new government spending with comparable cuts elsewhere. Another method to arrive at the stated goal would be via a balanced budget amendment to the U.S. Constitution, a move advocated by the majority of Congressional Republicans. On 11/25/11, the Republican-led House failed to obtain the 290 votes needed for a balanced budget amendment, obtaining only 261 such votes. This initiative therefore expired with the 112th Congress at the end of CY2012.

In general terms, it appears that the American people can expect Congress to be selective and largely ineffective in its application of PAYGO law provisions when they pass spending bills for the remainder of President Obama's first term in office. This promise to enforce PAYGO budgeting rules has not been fulfilled.
The Promise: "I'll put in place the common-sense regulations and rules of the road...rules that will keep our market free, fair, and honest; rules that will restore accountability and responsibility in our corporate boardrooms."
When/Where: Campaign Speech, Saint Louis, MO, 10/18/08.
Status:Department of Treasury document "Financial Regulatory Reform: A New Foundation" was released on 06/17/09. That document provided the framework for future legislation to (1) promote robust supervision and regulation of financial firms; (2) establish comprehensive supervision of financial markets; (3) protect consumers and investors from financial abuse; (4) provide the government with the tools it needs to manage financial crises; and (5) raise international regulatory standards and improve international cooperation.

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) into law on 07/21/10. This law reshaped oversight of the U.S. financial industry, included the creation of a new consumer protection agency, set new limits on banks using capital for trading and investing in hedge funds, and gave the government power to close down troubled financial firms.

Under H.R. 4173, the Consumer Financial Protection Bureau (CFPB) was set up by former Harvard contract law, bankruptcy and commercial law professor Elizabeth Warren, appointed on 09/17/10 as "Consumer Czar" for President Obama and Special Advisor to the Treasury Secretary.

After it opened on 07/21/11, President Obama nominated Ohio Attorney General Richard Cordray to head the CFPB. Mr. Cordray's confirmation was blocked by at least 44 Republican senators who believed that a single director would have too much unaccountable, unchecked power and authority to set his/her own budget and agenda. The Republican senators preferred that the CFPB be headed by a board or commission.

President Obama went against the will of Congress by appointing Mr. Cordray to head the CFPB on 01/04/12, without Senate confirmation, while the Congress was technically and constitutionally in "pro forma" session (the Senate often holds pro forma sessions specifically to prevent the President from making recess appointments to fill vacancies in federal offices that require the approval of the Senate. The Senate eventually confirmed Mr. Cordray's appointment on 07/16/13 for a five-year term.

Since its inception, the CFPB has been credited with (1) collecting over $11.7B from credit card companies, bank and mortgage companies for abusive practice as of end-CY2016; (2) creating a user-friendly website for consumer complaints; and (3) making information on mortgages, student and auto loans more accessible and understandable.

On 10/11/16, the Court of Appeals for the District of Columbia ruled that the structure of the CFPB was unconstitutional because its director (Mr. Cordray) was only loosely accountable to President Obama and could only be removed from his position for cause. The court directed an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act so that a president could remove the CFPB Director at will. Predictably, the CFPB disagreed with that ruling and is expected to elevate the matter to the Supreme Court where, the CFPB argues, the Director's removal solely for cause has precedent. If this occurs, it will be after President Obama vacates the White House in 01/17.

Nonetheless, this promise was fulfilled.
The Promise: "...will protect workers who fall into bankruptcy as a result of a medical crisis...will create an exemption from the new law's requirement that middle class families extend their debts rather than have them forgiven."
When/Where: Obama-Biden Plan: "Supporting Urban Prosperity," dated 09/11/08.
Status:As of early-CY2013, no exemption has been created to forgive debts that led to bankruptcy as a result of medical crises.

This promise has not been fulfilled.
The Promise: "...believes that we need to ensure that all Americans have access to clear and simplified information about loan fees, payments, and penalties...he'll require lenders to provide this information during the loan application process..."
When/Where: Obama-Biden Plan: "Supporting Urban Prosperity," dated 09/11/08.
Status:The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) signed into law by President Obama on 07/21/10 offers expanded mortgage loan terms protection to the home buyer, but does not provide the other simplified application protections for all types of loans reflected in this promise.

No rule is known to have been published by the new Consumer Financial Protection Board (CFPB) that would cover all loan types for all Americans.

Legislation such as the "SAFE Lending Act of 2012" (S. 3426) introduced by Senator Jeff Merkley (D-OR) on 07/24/12 or a bill by the same name (H.R. 6483) introduced by Congresswoman Suzanne Bonamici (D-OR) on 09/21/12 fell far short of mandating the provision of information about loan fees, payments, and penalties on all types of loans as intended by this promise. Both of these bills died with the 112th Congress at the end of CY2012 anyway.

This promise has not been fulfilled.
The Promise: "...will work with his Secretary of Treasury and the Federal Deposit Insurance Corporation to encourage banks, credit unions, and Community Development Financial Institutions to provide affordable short-term and small dollar loans -- and to drive the sharks out of business."
When/Where: Obama-Biden Plan: "Supporting Urban Prosperity," dated 09/11/08.
Status:In CY2010, according to JMP Securities of San Francisco, "about 35% of the $32B in small-dollar loans" originated on the Internet. That percentage is expected to grow to 62% by CY2016.

The Consumer Financial Protection Bureau (CFPB) estimates that interest rates charged by payday loan sharks can reach as high as 521% for loans made to the underserved. "Underserved" refers to those without checking or savings accounts with an insured depository institution or has such accounts but cannot secure personal loans from insured depository institutions for whatever reason, formally referred to as the "unbanked" or "underbanked." Oversight of short term loans, under current laws, is assured by state level regulators. The U.S. Office of the Comptroller of the Currency (OCC) desires that regulator responsibilities remain at the state/local level.

To enhance the OCC's oversight responsibilities, Congressmen Blaine Luetkemeyer (R-MO) and Joe Baca (D-CA) and others introduced the "Consumer Access, Innovation and Modernization Act" (H.R. 6139) on 07/18/12 to amend the "Truth in Lending Act" of 1968. This bill expired with the 112th Congress at the end of CY2012.

Other related legislation that would have helped fulfill this promise, but which also died with the 112th Congress are as follows:
- Safe Lending Act of 2012 (S. 3426); and
- Protecting Consumers from Unreasonable Credit Rates Act of 2012 (S. 3452).

Despite additional funding provided to Community Development Financial Institutions during President Obama's first term in office (see Promise TY-42), we see no trend in the reduction of loan sharks and providers of "payday" loans to the unbanked or underbanked as of mid-CY2012. Further, this issue was not addressed in the "Dodd-Frank Wall Street Reform and Consumer Protection Act" (H.R. 4173) signed into law by President Obama on 07/21/10.

This promise has not been fulfilled.