Put Your Cash In A Mattress

JOHNSON: Violating privacy one bank account at a time
Democrats want to pay the feds to watch every penny you spend

Sen. Christopher Dodd's "regulatory reform" bill, S. 3217, the Restoring American Financial Stability Act of 2010, has many contentious proposals that have members from both political parties on edge.

The bill cauterizes "too big to fail" by establishing a Financial Stability Oversight Council that would indentify politically important institutions, sending the signal that some companies are indeed too big to fail.

It creates a permanent bailout authority by authorizing the Federal Deposit Insurance Corporation (FDIC) to "make available ... funds for the orderly liquidation of covered financial institutions."

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However, one specific component that would make George Orwell say, "I told you so," is the establishment of the Bureau of Consumer Financial Protection (BCFP). If the name of the agency is not enough to conjure up images of black helicopters, the description will certainly do the trick.

Established in Title 10, this new autonomous agency will be sheltered within the Federal Reserve, but will function independent of the currently established, traditional regulatory framework. Congress or any other agency will have no veto power over the BCFP.

This new agency's budget will be 12 percent of the 2009 Federal Reserve System operating budget, or approximately $646 million. In 2008, the Federal Reserve's operating budget was $2.5 billion but it increased $600 million to $3.1 billion for 2009. The 2009 budget baseline was used because it was the most inflated baseline in recent history. Rather than trimming the fat like many state budgets are forced to do in the current economic crisis, Mr. Dodd used the most inflated budget baseline
he could find to fund this agency.

This bureau is given the unprecedented authority to monitor personal bank transactions and uses personal financial data to regulate consumer choice.

Established in Section 1022 on Page 1028, the BCFP is given the authority to monitor consumer financial patterns and, "implement and, where applicable, enforce Federal consumer financial law." Specifically, Subsection C gives this agency authority to
"gather information and activities of persons operating in consumer financial markets."

Further, Section 1071 allows the BCFP to "use the data on branches and [individual and personal] deposit accounts" and "shall assess the distribution of residential and commercial accounts at such financial institution across income and minority level of census tracts; and may use the data for any other purpose as permitted by law." Never before has the federal government actively sought to aggregate data on every single personal and business financial transaction in the U.S. until now.