Obama enters banking fray while lobbyists rope-a-dope Congress

President Barack Obama’s sheer popularity will make it harder for members of Congress to water down banking and finance regulations, but his willingness to play legislative hardball has already score a major victory over another key bank lobby priority: student loan subsidies.

As Steve Benen notes for The Washington Monthly, the government has been giving money to private student loan companies for years in hopes that the funds are used to make responsible loans. In reality, the subsidies are squandered on executive compensation and shareholder dividends. As a solution, Obama proposed eliminating the bank handouts and replacing them with direct government loans to students.

The plan hit a temporary roadblock when Sen. Ben Nelson, D-Neb., tried to scuttle the legislation to benefit lenders in his home state. As Benen explains, the student loan proposal wouldn’t have cleared the Senate without Nelson’s support. With 60 votes needed for any proposal to clear a filibuster, Obama usually needs every Democrat he can get. But instead of diluting the plan to win over Nelson, Obama just went around him by forging an agreement with negotiators in the House and Senate. The student lending changes will be pushed through the budget reconciliation process, allowing the measure can pass the Senate with just 51 votes, a situation which all but guarantees passage of any measure.

If Obama can win so easily on student loans, he can win on stalled credit card reform, but he has to move quickly.

Unemployment call centers are being completely overwhelmed by the volume of laid-off workers seeking relief. As Marty Durlin notes for High Country News, The Colorado Department of Labor and Employment is currently taking more than 10 times the call volume it received during the recession of the early 1990s. As job cuts continue to escalate, people are relying more and more on credit cards to fund necessities. The recession is happening right now. Reform can’t wait.

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