Consumer Watchdog on a Shorter Leash
July 19, 2011
As a result of political gridlock and partisan battles, the Consumer Financial
Protection Bureau (CFPB) will launch on July 21 without an appointed director,
meaning it will not be quite as aggressive as promised. Absent a director, the
agency will not be able to crack down on mortgage brokers, nor will it have
authority over payday lenders and remittance companies. President Barack Obama
has nominated former Ohio Attorney General Richard Cordray to head the agency,
but Republicans say they will oppose any nominee until key changes are made in
the planned structure of the agency. The leaderless agency initially will be
denied broad authority to prohibit "unfair, deceptive or abusive acts or
practices" or to issue rules requiring better disclosures of the terms of
financial products. However, the bureau will immediately take over the authority
to enforce 18 existing consumer protection laws. Nearly every Republican in
Congress and banks across the nation opposed the creation of the CFPB, arguing
it would restrict access to credit. Meanwhile, the idea was quickly embraced by
Obama and consumer advocates. The bureau likely will be able to run for a short
time without an appointed director, but that will slow it from addressing
long-standing problems, according to Travis Plunkett, legislative director for
the Consumer Federation of America.
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