NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's uplifting perspective on world, national, and local politics.

Tuesday, July 19th, 2011

Senate needs to move forward on confirming new chief for the Consumer Financial Protection Bureau

There’s good news and bad news for Amer­i­can con­sumers this week.

The good news is that on July 21 the land­mark Con­sumer Finan­cial Pro­tec­tion Bureau (CFPB) takes over as the nation’s chief con­sumer bank reg­u­la­tor – it will super­vise mort­gages, cred­it cards, oth­er bank loans, and fees such as those charged for over­draft pro­tec­tion. The fail­ure of oth­er reg­u­la­to­ry agen­cies to stop preda­to­ry Wall Street prac­tices is wide­ly rec­og­nized as a pri­ma­ry cause of the 2008 mort­gage melt­down that trig­gered the cur­rent reces­sion, and the CFBP has been wide­ly rec­og­nized as an essen­tial tool to pre­vent anoth­er eco­nom­ic catastrophe.

The bad news is that because no direc­tor has been con­firmed, the Bureau will not be able to effec­tive­ly pro­tect con­sumers in the finan­cial mar­ket­place that includes pay­day lenders, mort­gage com­pa­nies, and cred­it bureaus. With­out a direc­tor, America’s newest con­sumer cops won’t have the polit­i­cal pres­ence and clout need­ed in reg­u­la­to­ry bat­tles with Con­gress, oth­er bank reg­u­la­tors, and the banks themselves.

Last fall the Pres­i­dent select­ed Pro­fes­sor Eliz­a­beth War­ren to build the new agency. War­ren gets the cred­it for cre­at­ing and push­ing the idea of a con­sumer watch­dog and is a high­ly-respect­ed aca­d­e­m­ic expert and pop­u­lar author on con­sumer finance. She worked tire­less­ly to hire and man­age a vari­ety of staff – select­ed from busi­ness, oth­er agen­cies, acad­e­mia, and con­sumer groups (some hires list­ed here) – to set up the new bureau so it would be ready on July 21.

The Pres­i­dent has announced his inten­tion to nom­i­nate one of Warren’s first senior hires – for­mer Ohio Attor­ney Gen­er­al Richard Cor­dray, the cur­rent enforce­ment chief at the CFPB – as its first direc­tor. Cor­dray has a well-bal­anced record as an AG who worked to pro­tect the peo­ple of Ohio, recov­er­ing over $2 bil­lion dol­lars from Wall Street in the past two years to repay Ohio’s wrong­ly-fore­closed home­own­ers, the state’s loot­ed pen­sion funds, and cities and coun­ties that lost mon­ey once guar­an­teed by Wall Street.

Although Cor­dray is well qual­i­fied to pro­tect Amer­i­can con­sumers as the first direc­tor of the CFPB, his con­fir­ma­tion by the Sen­ate is not guar­an­teed. Repub­li­cans, who hold a minor­i­ty in the Sen­ate, have already writ­ten to the Pres­i­dent indi­cat­ing that they will fil­i­buster any nom­i­nee – regard­less of qual­i­fi­ca­tions – unless the Bureau’s pow­ers are first gutted.

It is hard to imag­ine that Sen­a­tors who oppose even high­ly-qual­i­fied nom­i­nees are putting the inter­ests of the Amer­i­can peo­ple ahead of spe­cial inter­ests on Wall Street. Sim­ply put, these Repub­li­can sen­a­tors are attempt­ing polit­i­cal extor­tion on behalf of the big banks that have invest­ed mil­lions to oppose any mean­ing­ful reform to finan­cial oversight.

If the Sen­ate finds the for­mer Attor­ney Gen­er­al qual­i­fied, they should hon­or their respon­si­bil­i­ty and allow the con­fir­ma­tion process to pro­ceed. If they shirk their respon­si­bil­i­ty by block­ing a vote, the Pres­i­dent should act in the inter­ests of con­sumers and use his author­i­ty to appoint a direc­tor in August.

The bat­tle over appoint­ing some­one to lead the CFPB is part of an ongo­ing war being waged by pow­er­ful spe­cial inter­ests against ordi­nary Amer­i­cans, and it’s a bat­tle the Pres­i­dent should fight on behalf of Amer­i­cans strug­gling keep their finan­cial heads above water in a reces­sion caused large­ly by Wall Street greed.

Con­gress asked tax­pay­ers to bail out the banks imme­di­ate­ly after the eco­nom­ic col­lapse, but wait­ed near­ly two years before final­ly pass­ing the his­toric Dodd-Frank Wall Street Reform and Con­sumer Pro­tec­tion Act to pro­tect con­sumers from a repeat of the night­mare. To make that promise real, a strong con­sumer ‘cop on the beat’ is need­ed to pro­tect aver­age Americans.

It’s cer­tain­ly good news that we now have a new finan­cial police depart­ment focused sole­ly on look­ing out for con­sumers. It will be bet­ter news when that police depart­ment has a sher­iff to lead it.

Note: NPI con­trib­u­tor Steve Breaux is a pub­lic-inter­est advo­cate for the Wash­ing­ton Pub­lic Inter­est Research Group (Wash­PIRG), which works to pro­tect con­sumers, encour­age a fair and sus­tain­able econ­o­my, and fos­ter respon­sive and demo­c­ra­t­ic government.

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