Appointment Clears the Way for Consumer Agency to Act

January 5, 2012
New York Times P. A16
consumer financial protection bureau news

On Jan. 4, President Barack Obama used his recess appointment powers to install Richard Cordray as head of the new Consumer Financial Protection Bureau (CFPB), effectively enabling the agency to monitor payday lenders, credit bureaus, and utilize all of the powers given to it under the Dodd-Frank law. Without a director at the helm, the agency was only able to monitor and enforce existing regulations on consumer financial products and not able to write new regulations for banking products. Cordray said, "Now, with a director, the CFPB can exercise its full authorities -- with respect to both banks and nonbanks -- to help those markets operate fairly, transparently, and competitively. [Most of the nonbank financial companies] had no regular federal oversight in the run up to the financial crisis. They led a race to the bottom that pushed aside responsible businesses, including community banks and credit unions, and greatly harmed consumers." The CFPB had begun its mission by placing regulators in the largest banks to review mortgage lending and consumer banking fees, and the CFPB director can now influence banking policy as a member of the Federal Deposit Insurance Corp., which is still waiting for the U.S. Senate to confirm its presidential nominees. While some applaud the recess appointment of Cordray, banking groups say that it places the future of the CFPB in constitutional jeopardy and could undermine its authority and credibility. Republicans have held up Cordray's confirmation because they want to reform the agency to include a five-member board rather than a single director, garner greater oversight and accountability for the agency, and ensure the budget for the CFPB goes through the congressional appropriations process.
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