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President Confirms Director Cordray To Head the CFPB
Iowa PIRG applauds President Obama for standing up for consumers by making a recess appointment of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau. The President’s action means that the CFPB indisputably now has all its powers to protect the public from unfair financial practices, whether by banks or other financial firms, such as payday lenders and credit bureaus.
Since July 21, the CFPB – a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act -- had been up and running, but arguably only with partial powers. It’s the nation’s first federal financial regulator with only one job—protecting consumers -- including seniors, students and servicemembers -- from unfair financial practices.
Now, with a director in place, the CFPB has additional abilities that kick in—including the right to supervise payday lenders, mortgage companies, credit bureaus, debt collectors, private student lenders and other non-banks. It also now has additional powers over banks and credit card companies.
In was just three years ago that reckless and predatory Wall Street practices collapsed the economy and cost us 10 million jobs, millions of homes and trillions of dollars in others' home equity and retirement values.
Many consumer advocates and experts consider establishment of the CFPB in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act as the most significant consumer financial protection since deposit insurance after the 1929 Great Crash.
Yet, without a director, the CFPB could not fully do its job. Too many members of the Senate failed to do their job, which is to confirm qualified nominees. They backed Wall Street’s needs, not the needs of families, soldiers, seniors and students in the financial marketplace. The President did his job with the recess appointment of Richard Cordray to direct the CFPB. Now, the CFPB can do its job, protecting consumers from unfair financial practices.
How You Can Help
Please take a moment and thank the President for his action appointing Rich Cordray to head the Consumer Financial Protection Bureau.
For years federal bank regulators ignored numerous warnings of increasingly predatory mortgage practices, credit card tricks and unfair overdraft policies used by the big Wall Street banks. They also ignored warnings of risky securities being packaged and sold to investors.
In September 2008, following the collapse of the mortgage market, these Wall Street practices brought down the entire U.S. and parts of the world economies. The lack of regulatory protections cost us ten million jobs, millions of foreclosed homes and trillions of dollars in additional lost home and retirement values. We're still recovering from the recession brought on by Wall Street excesses.
After first immediately asking taxpayers to bail out the Wall Street banks because they were “too big to fail,” in 2008, Congress finally stepped up in July 2010 and enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. That landmark legislation took major steps to rein in Wall Street, cut risks to the banking system and police the investor markets. For example, it reforms the previously unregulated and shadowy derivatives marketplace. The new law also responded to the growing use of predatory practices by financial firms. The centerpiece of this landmark legislation is the creation of the U.S. PIRG-backed Consumer Financial Protection Bureau (CFPB), a new agency that will act as a counterbalance to the banks and ensure that the credit cards, mortgages, and student loans that consumers use are safe and easy to understand.
As of July 21, 2011, the CFPB has been your cop on the beat, although it started work even before that. When you have a complaint about a bank or credit card company, you can call on the new CFPB, which is online at www.ConsumerFinance.gov. It wants to hear your ideas now. Here is our new PIRG fact sheet, just for consumers, explaining what the CFPB does.
The work’s not done yet.
The CFPB and the other agencies also tasked with implementing new reforms, primarily the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have big tasks ahead of them to implement new rules to protect the public. But the more than two thousand industry lobbyists who spent over half a billion dollars in their unsuccessful efforts to weaken, delay and gut the reform haven’t gone home. They’ve simply moved part of their encampments a mile or so down Pennsylvania Avenue from the Capitol to the Treasury Department, CFPB, SEC and the Fed, where some of their many phalanxes of lobbyists are arguing to weaken or delay the law as it is implemented through the rule making and regulation process. We’re actively engaged in filing comments and participating in these rules.
The industry lobbyists are still up on Capitol Hill as well, seeking amendments to or repeal of the new law. In February, the House passed a bill weakening the funding for the CFPB, SEC and CFTC, although since then the Senate on several occasions has rejected most of these changes (and rejected all the changes to the CFPB).
In July, on the day the CFPB took over protecting consumers, the House passed a special-interest backed bill weakening the CFPB’s powers in a variety of ways. In May 45 U.S Senators had vowed in a letter to the President to block the confirmation of anyone to head the CFPB unless similar weakening legislation passed the full Congress. In December 45 Senators blocked consideration of an up/down vote on Rich Cordray’s nomination (60 yes votes were needed, but the vote was 53-45).
Those Senators will be looking to challenge the President’s decision to make the appointment, and will be backed by powerful allies including the U.S. Chamber of Commerce and the American Bankers Association. We need your help to fight back.
Even before Cordray’s appointment in January 2012, the CFPB had started knocking on the doors of big banks, to “examine their activities” to ensure that they are fully in compliance with the laws. Now that the CFPB has a director, credit bureaus, private student lenders, mortgage companies, payday lenders and other non-bank financial firms are waiting for the CFPB to come and knock on their doors, too. Consumers will benefit. So will fair-dealing firms.
Read our latest report, Ten Reasons Why We Need the Consumer Financial Protection Bureau Now, written by U.S. PIRG for our coalition, Americans for Financial Reform.
DEFEND THE CFPB
Tell your representative to oppose the “Financial CHOICE Act,” which would gut Wall Street reforms and destroy the Consumer Financial Protection Bureau as we know it.
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