President Barack Obama’s proposal to create a Consumer Financial Protection Agency came in with a bang. But it appears to be going out with a whimper.

Before the proposal was introduced in Congress last year, Treasury Secretary Tim Geithner said of the economic meltdown. “This crisis was caused, in part, by a lack of consumer protections.”

And?

Watchdog Nation checked in with several Washington, D.C., sources last week to learn what’s happening to the proposal in Congress.

The answer? Not much.

The bill passed the House but is stuck in the Senate.

“Opposition to financial reform is intense, coming in particular from big banks and other monied interests that seek to protect the status quo,” the Consumer Federation of America said in a recent statement.

The U.S. Chamber of Commerce says a new agency would hurt small-business owners that rely on credit cards, home-equity loans, auto-title loans and other sources of consumer lending to finance their businesses.

“The idea sounds great on its face, but we need to have a serious discussion about what the CFPA would actually do and what authority it would have,” Ryan McKee of the chamber told me. “The potential for unintended consequences is great.”

The CFPA would give federal regulators power to oversee mortgage companies, mortgage brokers, finance companies, payday lenders and other nonbank providers. Businesses would be blocked from offering financial products that charge prepayment penalties, unjustified fees and excessive interest rates.

Supporters say the agency would provide the public with better information about how to avoid so-called abusive lending and credit problems, and would improve disclosure to borrowers.

It would merge the enforcement divisions of several government agencies into the new agency.

The chamber says it worries that small businesses would lose access to credit, something they already struggle with because they are either too small or too new. The predicted result? Business closures, fewer startups, slower growth and the loss of jobs.

The chamber is also concerned that the proposal would ban products that are abusive but doesn’t clearly define abusive, said McKee, senior director for the chamber’s Center for Capital Markets Competitiveness.

Another sticking point for the chamber: The bill requires “too much disclosure” to consumers.

“Having too much disclosure is like having no disclosure at all,” McKee said, adding: “We need to simplify the disclosures so people get straightforward information.”

The chamber’s solution: Close gaps in existing laws that kept regulators from finding major problems; increase authority for regulators to enforce existing rules; and make sure regulators from various agencies communicate better.

The proposal for a CFPA was first floated in 2007, a year before the meltdown, by Harvard Law School professor Elizabeth Warren. She noted that federal regulators won’t allow a toaster that could burst into flames to hit the market. But mortgages and other “dangerous financial products,” she wrote, are not similarly regulated.

Elizabeth Warren

With questionable loans, she wrote, families can suffer from “wiped-out savings, lost homes, higher costs for car insurance, denial of jobs, troubled marriages, bleak retirements and broken lives.”

Warren is considered a strong candidate to head the agency — if it ever comes into existence.

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, is carrying the ball for the CFPA. But he’s running into a strong defense put up by Sen. Richard Shelby of Alabama, the top Republican on that panel. Shelby has called the proposal “a folly and dangerous.”

It all comes down to whether Dodd and Shelby can agree on a compromise.

“We have reached an impasse,” Dodd said this month. “While I still hope that we will ultimately have a consensus package, it is time to move the process forward.” Dodd says he hopes to release a new proposal this month.

Sen. Richard Durbin, D-Ill., explained last year why he believes it’s tough to get a proposal through: “The banks — hard to believe, in a time when we’re facing a banking crisis, that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

Susan K. Weinstock, director of financial reform for the Consumer Federation, said she views that as the major hurdle.

“How much are senators hearing from individual consumers about this? How much do consumers know about this?”

What do you think? I’m most interested in your comments on this.

Better yet, contact your congressional representatives and let them know what you think. If you don’t know who they are, visit www.votesmart.org and type in your zip code — and you’ll quickly find out.

# # #

Do you want to learn more?

House Resolution 4173, known as the Wall Street Reform and Consumer Protection Act, is now in the Senate.

It merges regulatory powers of the Federal Reserve, Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Office of Comptroller of the Currency, the Federal Trade Commission and the National Credit Union Administration.

Here is where you can read more about the actual bill.

Here is where  you can watch videos and read more to learn about the U.S. Chamber of Commerce’s opposition.

Here is where you can learn about the Consumer Federation of America’s support.

# # #

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

Have you ever heard of Warren McGraw?

Probably not.

I first met him in the early 1980s when I covered him as a Statehouse reporter in West Virginia. He served as the state Senate President. He was a passionate liberal firebrand who earnestly believed in the good of working men and women.

Later, he was elected to the West Virginia Supreme Court.

But then something awful happened to him when he ran for reelection in 2004.

Don Blankenship, owner of Massey Energy, one of the largest coal companies in the world, spent an estimated $3.5 million on behalf of McGraw’s Republican opponent, Brent Benjamin.

He paid for a TV ad that criticized McGraw of voting to “free an incarcerated child rapist, and of allowing that rapist to work in a public school.”

McGraw said later, “They say our court set a child molester loose in our schools. It’s absolutely untrue. I’m embarrassed to go out in public. They’ve absolutely destroyed me.”

McGraw did not write the opinion in the case. But he was part of the majority that sent the case involving the molester back down to a lower court for further action. Yes, it was probably a mistake. But everyone in public life makes a mistake of some type. That’s part of public life. McGraw’s career in West Virginia spanned decades.

At the time of the election, everyone knew that Blankenship’s company was likely to be involved in cases before the Supreme Court during Benjamin’s subsequent 12-year term, including one supposed $77 million case.

Indeed, just three years later, Benjamin cast a crucial vote overturning a $50 million verdict — despite requests that he recuse himself because of a the obvious conflict of interest.

The loser in that case took his appeal all the way to the U.S. Supreme Court, which eventually ruled in a very important decision in 2009 “that elected judges must step aside from cases when large campaign contributions from interested parties create the appearance of bias.”

That decision found that excessive campaign contributions pose “an unconstitutional threat to a fair trial.”

So far so good.

But here’s what’s most disturbing.

The U.S. Supreme Court also ruled recently that limits on campaign contributions by corporations denied these same corporations their right to free speech.

So please, someone, anyone, correct me if I’m wrong, but here’s what I believe.

The Supreme Court ruling will open the floodgates to any corporation doing just what Don Blankenship did: paying for ads that distort the record of any candidate or incumbent whose intentions are the opposite of corporate executives.

In a half century of life on this planet, I have never seen a threat to our democracy as this.

Right now, we have a two senators from each state. But in just a few years, our senators will represent car companies, banks, coal companies, health insurance companies, etc.

Tell me if I’m wrong.

But I really do believe that because of the Supreme Court decision, our democracy is doomed.

# # #

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

Shaylynn Lynch was an aspiring actress in high school, but when she didn’t get any college scholarships for drama in 2004, she decided to follow a family tradition and serve her country.

She joined the Navy and made a promise to herself that she would go to college later — at the government’s expense under the GI Bill.

The petty officer third class served four years, including more than a year in combat, as an aviation electronics specialist on an aircraft carrier in the Persian Gulf.

After she returned to civilian life last summer, she signed up for the new Post-9-11 GI Bill and kept her promise, studying drama and film at the University of North Texas. But money from the government to pay for tuition, books and fees and her housing allowance didn’t come for three months.

She finally received a check for some of it in November but was still owed thousands more. The 23-year-old veteran fell behind in her bills and had to take out loans to cover her expenses.

She called the Department of Veterans Affairs, she estimates, more than 30 times.

“There were no answers for months at a time,” she said. “I asked to speak to someone higher up, and they said no. I wanted a timeline, but I wasn’t getting any answers other than, ‘We’re working on it.’”

The VA was flooded with benefits requests last year when the new GI Bill went into effect in August. It couldn’t keep up.

Across the nation, stories are told of veterans evicted because they couldn’t pay rent and others who dropped out of college while waiting for checks.

Lynch is one of tens of thousands of veterans waiting for benefits due them.

While VA officials say they’re working on the backlog, no one disagrees that thousands have been left — borrowing a phrase from Veterans Affairs Secretary Eric Shinseki — worrying about their finances when they should have been focused on their schoolwork.

When the program went into effect, the government processed 2,000 claims a day. Now, after hiring extra workers, the VA says it can handle 7,000 a day.

Promises made were long delayed by the VA.

“Our primary mission at the VA is to be an advocate for veterans,” VA spokesman Drew Brookie said. “And we fully share concerns about timeliness of benefits claims processing. No one should have an adversarial relationship with the VA.”

Veterans groups say many claims are processed by hand. The new budget proposed by President Barack Obama this week includes $44 million to complete an automated system by December for processing claims.

To help students, the VA also made advance emergency payments of up to $3,000 to claimants who desperately needed money. The VA announced last month that it has begun applying the advanced payments to student accounts.

In a noteworthy event, the VA also announced that it has closed its call centers on Thursdays and Fridays so workers can process more claims instead of handling phone calls. That means VA call centers are only open three days a week.

The VA beefed up its work force, too. In the past year, 760 people were hired and overtime was “maximized,” the VA said.

How did this happen?

The VA was forced to set up the program much quicker than usual, said Skip Kempnich, a board member for the National Association of Veterans’ Program Administrators. Confusion abounded because the VA’s instructions to college administrators were vague and kept changing, said Kempnich, who works at the University of Iowa.

Compounding the problem, the VA’s campus liaisons were called back in from the field to process claims, so campus administrators had as much difficulty as Lynch did trying to find out what was happening.

Tuition money is sent directly to schools, with the other benefits going to students. At UNT, the registrar’s office said students such as Lynch were not penalized. Officials knew the money was coming and made loans available to hold students over.

After her discharge, Lynch turned down lucrative electronics jobs to pursue her dream. She hopes to become a film director.

This week, she went to her mailbox and found a long-awaited check from the VA. But Lynch says she’s not sure whether everything has been paid. The form letter did not include a breakdown of the various benefits and their amounts.

When I pointed this out to Brookie, the VA spokesman, he agreed to fetch Lynch’s records and provide her with a breakdown.

The experience frustrates her, she said. “I don’t like asking for handouts, but this was something that was promised to me.”

Her grandfather, Air Force veteran Chuck Kedy, who first notified Watchdog Nation about the problem, said, “It really upsets me when they don’t take care of the kids when they serve their country.”

Final note: A veteran friend of mine, Anthony Martinez, a talented writer and photographer, wrote a terrific blog post recently on how to deal with the VA. And thank you Anthony for your great note: “The copy of Watchdog Nation you signed for me last year helped me get results (and write those posts). Thanks.” (That’s what Watchdog Nation wants to do!) Read Anthony’s great ideas here.

###

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

When Navy vet Lynch finally received a months-late payment from the VA, the accompanying letter did not provide her with a breakdown of any type.

When Lucille Drain resigned in November from the Newark City Council, she was 96 years old and the oldest serving public official in Texas. But her age wasn’t what did her in.

After 26 years on the council, she wrote in her resignation letter: “The main reason for resigning early before term ceases, I care not to work with new council members through computers with all the questions and answers cut and dried before meetings.”

As first reported in the Wise County Messenger, she said she believed that city business was being discussed by council members and the mayor via e-mails, instead of in a public forum.

“I don’t think a city can be run by computers,” she stated.

Bless her for telling it like it is. In many towns and school districts, e-mail communication, texting, phone calls and face-to-face talk about the people’s business is conducted by public officials away from publicly announced meetings where the work of government is supposed to take place. But violations are difficult to prove.

One of the few ways to enforce the Texas Open Meetings Act is the fear among officials that if they violate the law, they could get caught. The penalty is a $500 fine and up to six months in jail.

As I first reported in the Dave Lieber column in the Jan. 8, 2010 Watchdog column in the Fort Worth Star-Telegram, now there’s an attempt under way by some public officials to remove criminal penalties from the law. These officials, acting in what appears to be a highly coordinated effort, are saying that the open-meetings law is too strict.

Although 1989 was the last time a public official in Texas went to jail for this offense, some public officials claim that the law is a violation of their right of free speech. They say they want it changed because they should be allowed to talk to whomever they want to without the threat of jail hanging over their heads.

Under the law, a majority of members, or quorum, of a public board is prohibited from discussing government business outside an official meeting. According to the most widely accepted interpretation of the law, the public is not prevented from talking to government officials, but in some circumstances, officials are not allowed to fully respond in a public meeting unless the topic has been listed on a pre-published meeting agenda.

Also, the “free speech advocates” say they are afraid that e-mails can be used against them

Any movement to decriminalize the open-meetings law and roll back open government in Texas during this era of greater accountability might sound absurd on its face. Approximately 20 states tie some form of strict penalty to their open-meetings laws, open-government experts says.

However, one of Texas’ best lawyers, Dick DeGuerin of Houston, is co-counsel in a federal lawsuit filed last month in Pecos that challenges the open-meetings law on free speech grounds. Here is the lawsuit challenging Texas’ open records law.

The lawsuit states, “Citizens are afraid to talk to the officials who represent them, and those same officials are afraid to talk to the citizens, for fear of being indicted and prosecuted.”

Among those public officials listed as plaintiffs in the case: Arlington City Councilman Mel LeBlanc, who told my newspaper, the Fort Worth Star-Telegram, last month, “It’s an insult to individuals that spend a good portion of our lives in community service that if we misinterpret the Open Meetings Act in its vagueness that we can go to jail or be fined.”

At its annual conference, held in October in Fort Worth, the Texas Municipal League, which lobbies lawmakers on behalf of cities, passed a resolution submitted by the city of Sugar Land calling for decriminalization.

The resolution supports legislation next year “to amend the Open Meetings Act by replacing the criminal enforcement provisions with less restrictive penalties that balance the First Amendment right of governmental officials.” The replacement penalty most talked-about would overturn any decision made by a body if the open meetings act has been violated. This already exists as a noncriminal penalty under the current law.

Further momentum for the cause came when the 5th U.S. Circuit Court of Appeals ruled last year in a lawsuit filed by Alpine City Council members that public officials are protected by free speech even when they conduct “their official duties.”

Read the 5th Circuit’s opinion that pertains to Texas open government here.

That gives hope to those who want to remove the threat of a fine or jail time.

Frank Sturzl, executive director of the Texas Municipal League, says he believes that opinion shows that in the future, a federal court could rule that Texas’ law is too tough on public officials. Read his column “Texas Newspaper Lash Out At City Officials” on tml.org here.

Alpine City Attorney Rod Ponton, DeGeurin’s co-counsel in the lawsuit, told me: “We are fully in favor of open government and no ’secret deals.’ However, we favor individual First Amendment rights over government laws that censor elected officials.

“There is a balance that allows free communications and open government. Texas goes too far. Elected officials lose their free speech rights when they take office, and that violates the First Amendment.”

Sharply countering that, Texas Attorney General Greg Abbott’s office released a statement: “In this case, elected officials, municipalities and critics of open government are turning the First Amendment on its head. The First Amendment is furthered, not frustrated, by open meeting laws. And for that reason open meetings laws have been upheld under the First Amendment by every court . . . that has ever considered the issue.”

Blunt talk also comes from open-government advocate Keith Elkins, executive director of the Freedom of Information Foundation of Texas. He says, “Anybody that is having trouble following the law as it applies to open meetings of government officials should reconsider running for public office rather than trying to change the law.”

Meanwhile, momentum builds. The Wichita Falls City Council voted three weeks ago to join Alpine, Big Lake, Pflugerville and Rockport as co-plaintiffs in the current federal lawsuit.

Watchdog Nation will keep an eye on this one.

***

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the bookwon two national book awards in 2009 for social change. Twitter @DaveLieber

The station manager at the post office told me there was no theft. The box went in for maintenance. I offered to show him the police report and pulled out my camera and showed him this photo of the pry marks I took outside his station moments before.

Watchdog Nation warns you: Stop using those big blue collection boxes outside post offices — the ones often paired with drive-through lanes.

Mail theft from these collection boxes is common these days.

And the worst part?

If your mailing is stolen from one of these mailboxes, you may never know about it. The United States Postal Service nor its Inspections Service division do not always announce it. Nor do the local police.

As I first reported in the Dave Lieber column in the January 17, 2010 Fort Worth Star-Telegram, I discovered two nearby cities that handled recent mailbox thefts completely differently.

Both were hit by mail bandits on a Saturday night who used a crowbar or similar tool to pry open the mailboxes and steal the mail.

In Keller, Texas, the crime was handled very publicly. Residents were notified by Keller police on their Web site. And there was a news story in the Keller Citizen which reported the theft. Residents were asked to file a report if they believe their mail was stolen.

Several have done so, and Keller police say they now have leads.

It’s a different story in Haltom City, Texas, where police say a Jan. 3 incident was never reported as a theft by the post office. Because of that, the case is not listed as a mail theft (postal authorities can’t prove any mail was stolen) but as a criminal-mischief case.

Haltom City police say the case is already listed as inactive.

Don't use these mailboxes anymore. Mail gets stolen from them, and authorities might not tell you.

The secrecy behind the Haltom City break-in angers town resident Dee Taylor. She has been trying for two weeks to learn whether a letter she mailed hours before the break-in was stolen. No one will tell her.

Taylor knows about the theft because her husband, Delbert Cantrell, discovered the break-in when he went to mail a bill that Sunday morning. He found the box wide-open and empty.

Since then, Taylor has questioned postal employees about the incident, but no one will tell her anything, she says.

Taylor alerted Watchdog Nation to the unpublicized Haltom City mailbox break-in. Previously, I saw the police tape at the crime scene of the compromised Keller collection box. (Watchdog Nation uses that postal address.) So I knew something was up.

I called the U.S. Postal Service and the Postal Inspection Service, which is responsible for investigating mail theft. A postal inspector told me there have been other box break-ins outside area post offices. But nobody will tell me where and when those incidents occurred.

That means that residents elsewhere who mailed letters, bills or gifts might be theft victims and would never know.

In Haltom City, after Cantrell noticed the emptied box, the couple later saw that the box had been removed. When it was returned, it had a front grille at the entry point that makes it harder to pull mail back out through the slot. But pry marks were still visible on the back.

I visited the Haltom City post office and spoke with Station Manager Carlos Avelar. Taylor had previously questioned him without success.

“I got a call about the break-in Sunday,” I said.

“It was not a break-in,” Avelar said.

“What was it?” I asked.

“It was taken in for maintenance.”

I pulled out my camera and showed him a photo, taken minutes before, of what looked like crowbar marks.

He referred me to a higher-up, who told me she could not comment.

But after I told the postal inspector about the visible damage, the box was removed a second time and repaired again.

A Haltom City police report says police visited the post office to answer an alarm at 7:20 a.m. that Sunday. They found nothing amiss.

They returned an hour later after someone called about a box break-in. The outdoor box was open. They found two letters inside, which they carried into the post office and dropped in an inside slot.

“Mail may have been removed from the box, but I was unable to tell at this time,” officer R.A. Beshirs wrote. “It appeared that the perpetrator(s) used some type of unknown pry device to make the entry into the box.”

Haltom City police Sgt. Eric Peters said: “The case is inactive right now because we haven’t had anybody call us and tell us something was stolen, and we have no suspects in the case.

“Until we know for sure that there was mail taken out of there, our hands are pretty tied.”

He said those who believe that their mail was stolen from the Haltom City post office box around Jan. 2 or 3 should report it to police.

In Keller, where the public was notified and complaints came in, police Lt. Brenda Slovak called the theft “a big deal.”

“That was a lot of mail. That’s a lot of people’s bills that aren’t getting paid,” she said. “The economy’s bad enough without them having to make a late payment or pay extra fines or fees.”

Fort Worth Postal Inspector Tim Vasquez said he regretted that he couldn’t release any more information about mailboxes that were hit.

“While I do agree that disclosure is a good idea for the citizens, we have to watch that we don’t do anything to jeopardize the investigation. So we’re not going to give out any of the locations.”

Let me know of any mail thefts from area post office boxes. Postal authorities won’t share the information, but after verifying your tip with police and postal officials, I’ll share.

How else will you know to check whether your mail was stolen?

-Call your local police department.

-Call the U.S. Postal Inspection Service at 877-876-2455 and ask to speak to a division mail theft inspector for your geographic area.

-Or visit postalinspectors.uspis.gov

* * *

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber