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.

Adjacent posts