The Consumer Financial Protection Bureau opens for business today. It’s an agency with a simple idea: protect consumers from getting screwed in their financial dealings on credit cards, student loans, mortgages, payday lending, bank dealings, etc, etc. Some of the agency’s powers will not be transferred today, because it does not have an official Director. But the agency can regulate banks, and that includes most mortgage servicers.
This sounds almost like too simple a task. But the federal government has made a hash of consumer financial protection by splitting it up among seven different agencies and giving the main regulators the ability to pre-empt state and federal regulations. That pre-emption on safety and soundness grounds is diminished (though CPFB has plenty of government oversight), and more important, the CFPB has sole responsibility and accountability, and thus will make consumer protection a priority, rather than subject it to a backwater like the other federal agencies did.
To be clear, this is not a panacea for the financial sector. In fact, it’s just a small part of what needs to be done. But it gives at least one agency in the government a focus on consumers in the financial economy, and there’s no question that mortgage fraud and pushing people into loans they couldn’t afford was a primary cause of the financial crisis. So this is a slightly better country for having a CFPB.
One of the first acts of CFPB is a consumer hotline for credit card problems. Individuals with issues with their credit card companies are invited to contact CFPB with their problem.
Of course, there’s the matter of the director. Richard Cordray has no chance of being confirmed by the Senate. Forty-four Republicans have signed a letter saying they will not nominate anyone to the position, and thus allow a lot more regulatory authority to flow to CFPB, unless the agency is defanged, with a 5-member bipartisan commission instead of a director, a budget subject to annual appropriations, and a stronger ability for safety and soundness pre-emption of rules and regulations. The President has said he will protect the CFPB, and the Administration has recommended a veto of these changes to its structure or any similar gutting of the agency. But that brings us no closer to a director, and the ability for CFPB to regulate non-bank financial institutions.
Faiz Shakir has an idea: take the muzzle off Cordray and let him speak about the agency.
The well-worn tradition during the confirmation process is that presidential nominees do not speak to the press, forgoing all public utterances and instead being chaperoned into closed-door meetings with senators and important constituency groups.
Obama has been trying it that way, and it’s not working […] In fact, 44 Senate Republicans have pledged to filibuster John Bryson, nominated as commerce secretary, through no fault of his. The GOP caucus is holding the nomination ransom until it gets its way on pending free-trade deals […]
By silencing a nominee, the administration gives its critics the opportunity to spout unfounded concerns about the nominee’s fitness to serve. The conversation quickly descends from one about the individual’s merit to meritless attacks on his or her character or qualifications.
The White House must be willing to cede a degree of control over its day-to-day messaging in favor of the greater victory of getting its nominees passed and its policies enacted. The administration shouldn’t be turning down all press requests, but should instead be picking and choosing the venues that can give the nominee a fair and reasonable hearing.
It’s an idea, though I’m not sure it will really soften up Republicans. I imagine Elizabeth Warren will take over this role of speaking for the agency. But I don’t think it would hurt to see Cordray express himself in public. Not to mention do his current job as head of enforcement at CFPB.