Wall Street's Bought and Paid for Academic
Todd Zywicki is a right-wing academic who works for a Koch-backed think tank and came from a firm that advised some of the biggest companies in the financial sector. He even worked at a consulting firm that bragged about being hired by the financial industry to fight the Consumer Financial Protection Bureau (CFPB) on behalf of big banks like Bank of America, Visa and Citigroup, as well as a debt-relief company accused by the CFPB of deceiving consumers and charging illegal upfront fees.
Not only has he dedicated his life to fighting against consumer protections, but Zywicki argued against the very existence of the role he might occupy, saying that the CFPB should be run by a group of commissioners and subject to Congressional oversight, which experts say would result in partisan deadlock and stop the Bureau from holding banks and other powerful interests accountable.
Zywicki’s views are so extreme that he has even spoken out against the Seventeenth Amendment, which calls for the direct election of U.S. Senators.
Wall Street insiders and big banks looking for a friend at the CFPB would certainly find one in Todd Zywicki, but consumers would be left holding the bag.
Highlights: A Career Built On Making The Case For Big Banks And Wall Street Special Interests
Zywicki’s Consulting Firm Advised Some Of The Biggest Banks And Financial Institutions On How To Influence Washington Regulators
Zywicki was a Director at Global Economics Group, a consulting firm that advertised it had “been hired by industry to influence the CFPB and other regulatory agencies.” Clients of the firm included “some of the biggest names in the financial industry, among them Visa, Bank of America and Citigroup.” “What isn’t contained in Zywicki’s university profile, CV, byline or congressional testimony is the law professor’s other job: he is a director of the Global Economics Group, a consulting business that boasts in a brochure that its experts have been hired by industry to influence the CFPB and other regulatory agencies. Nor does Zywicki advertise Global’s client list, which includes some of the biggest names in the financial industry, among them Visa, Bank of America and Citigroup.” [Lee Fang, “The Scholars Who Shill for Wall Street,” The Nation, 10/23/13]
The firm’s clients also included “a debt-relief company accused by the CFPB of deceiving consumers and charging illegal upfront fees.” “Zywicki’s firm was retained for $500 an hour on behalf of Morgan Drexen, a debt-relief company accused by the CFPB of deceiving consumers and charging illegal upfront fees. None of these potential conflicts of interest, however, have been disclosed during the course of Zywicki’s anti-CFPB advocacy in the media or in government.” [Lee Fang, “The Scholars Who Shill for Wall Street,” The Nation, 10/23/13]
In March 2016, a federal judge ordered Morgan Drexen to pay “about $133 million in restitution and $40 million in civil penalties” for misrepresenting its services and charging illegal upfront fees. According to the CFPB, the company charged fees to customers who signed “contracts for both debt relief and bankruptcy services, when many only sought debt relief services.” [Lauren Williams, “Debt firm Morgan Drexen to pay $173 million in penalties, restitution,” Orange County Register, 03/21/16]
Zywicki did not disclose any of those potential conflicts of interest during the course of his “anti-CFPB advocacy in the media or in government.”[Lee Fang, “The Scholars Who Shill for Wall Street,” The Nation, 10/23/13]
The Only Regulations Zywicki Appears to Support are Pro-Industry and Anti-Consumer
Zywicki supports pre-payment penalties for mortgages and wrote that there is “overwhelming economic evidence” supporting their “efficiency.” “Prepayment penalties are a common term in many subprime mortgages, although they remain uncommon in most prime mortgages in the United States. Prepayment penalties are also included in most commercial loans and are present in virtually all European mortgages. Yet the White Paper contemplates banning prepayment penalties in mortgages. This reasoning is based on faulty economic logic and fails to recognize the overwhelming economic evidence supporting the efficiency of prepayment penalties.” [Joshua D. Wright and Todd J. Zywicki, “Three Problematic Truths About the Consumer Financial Protection Agency Act of 2009,” George Mason University School of Law, Lombard Street, Vol. 1, No. 12, 09/14/09]
Zywicki Called the Rescue of the U.S. Auto Industry “Executive Overreach” and Argued We Should Have Let Detroit Go Bankrupt
Todd Zywicki wrote that, without the government auto bailout, “General Motors almost certainly would have reorganized successfully in Chapter 11 without political interference.” He further wrote that the bailout was “‘far from a success story'” and “‘a cautionary tale of executive overreach.'” “For example, the Obama Administration touts the auto bail-outs as having preserved the domestic auto industry from collapse. This boast is a highly dubious assertion. General Motors almost certainly would have reorganized successfully in Chapter 11 without political interference.” [Todd J. Zywicki, “ECONOMIC UNCERTAINTY, THE COURTS, AND THE RULE OF LAW,” Harvard Journal of Law and Public Policy, Vol. 35, No. 1, p. 1, 2011]
“The bailouts of General Motors and Chrysler have been held up by President Obama and his supporters as a great success story — proof that, by working together, government and business can save jobs and strengthen the economy. But this popular narrative is dangerously misleading. Far from a success story the events surrounding the bailouts offer a cautionary tale of executive overreach.” [Todd Zywicki, “The Auto Bailout and the Rule of Law,” National Affairs, Spring 2011]
Zywicki’s Positions Are So Extreme He Has Even Argued Against The Direct Election Of U.S. Senators
Todd Zywicki opposes citizens being able to elect their U.S. Senators because he believes that having elections “removed a necessary safeguard against lobbyists and government’s own nature.” “Ratified in 1913, the Seventeenth Amendment to the United States Constitution established direct election of U.S. senators by popular vote. Before the amendment’s ratification, senators were elected by state legislatures.”
“Todd Zywicki, a professor of law at George Mason University, says the Seventeenth Amendment removed a necessary safeguard against lobbyists and government’s own nature. ‘The framers understood that, in order for the states to be protected from federal government overreach it was necessary to give the states a formal check,’ Zywicki said. ‘That check was by allowing the states in their corporate political capacity, the state legislatures, to choose senators.”
“‘The second aspect was that the Senate was to be a check on special-interest activity,’ Zywicki said. ‘By having the Senate chosen by a different constituency than the House, that was designed to raise the level of consensus to enact legislation, making it more difficult for special interests to capture the government.'” [Matt Hurley, “Utah Lawmakers Call for Seventeenth Amendment Repeal,” Heartland, 05/20/16]