Remember all those politicians howling about how we need more government regulation to protect people from the big banks and prevent financial crisis? And how, if only they were in power, they would fix things?

Now witness the results of the extra consumer protection the government is providing.

On October 15, the Wall Street Journal reported that the much vaunted Consumer Financial Protection Bureau (cfpb) is considering providing lenders (e.g. big banks) a “legal shield” against future litigation if the banks start giving out mortgages to “qualified” borrowers.

What this means, according to the Journal, is that the cfpb proposal mandates that judges “rule in lenders’ favor if consumers contest foreclosures.”

Wow!

Here is what is happening. America’s debt bubble is popping and the economy is slowing. Thus the big banks are not interested in giving out mortgages that are guaranteed to lose money, even to people who in past times would have qualified. This is not acceptable to quick-fix politicians who need to be reelected every four years. So, to encourage the banks to lend, the Federal Reserve is letting them borrow money at near zero percent interest. But even this unprecedented action is still apparently not enough. Why? The banks don’t want to issue mortgages at Federal Reserve-induced artificially low interest rates because if rates rise, their mortgage investments will tank—and before you know it, the banks will be needing bailouts again. And bailouts are no longer a sure thing. The same goes for Fannie Mae and Freddie Mac, the two government-owned mortgage giants that will be begging for billions of taxpayer dollars when interest rates go back up.

But instead of realizing banks are not lending due to the crummy economy and Federal Reserve market intervention—and working to roll back government manipulation and fix things—politicians are again trying to legislate away the laws of economics.

Now in an effort to encourage banks to lend, the Consumer Financial Protection Bureau is doing the exact opposite of protecting consumers.

It is now proposing to take away borrower’s rights to give big banks more protection and a greater incentive to lend.

Without protection from legal challenges, Americans “will continue to face challenges finding the most affordable mortgages and will find their path to home ownership more difficult,” said David Stevens, ceo of the Mortgage Bankers Association.

The system is so broken. It isn’t enough that banks can borrow from the Federal Reserve at near zero percent interest, use the money to make mortgages, and collect the spread. The little guy of course can’t get free money. He or she has to pay the middle man big banks. And now it also isn’t enough that big banks already have access to an army of Rocket Docket judges more interested in processing as many foreclosure cases as possible than making accurate rulings. But now regulators are proposing to give the banks their very own pocket judges that would have to automatically and legally rule in their favor!

How can anyone believe that giving big banks pocket judges that are required by law to rule in their favor will fix anything? Especially when these same banks were ground zero for so much of the mortgage fraud that played such a big role in the subprime mortgage crisis and financial meltdown in the first place? In reality this is a poisonous recipe for abuse of consumers—the very thing politicians supposedly set up the Consumer Financial Protection Bureau to prevent.

President Obama’s administration has made a big deal about how it is on the side of the small guy, but people need to ask who the Consumer Financial Protection Bureau—and by extension our political leaders—are really working for.

Once again we see that regardless of what political party is in power, the whole system is corrupt and needs to be completely replaced.