For months, Republican senators have vowed to block the confirmation of any director to the new Consumer Financial Protection Bureau, a centerpiece of last year's Dodd-Frank financial reform.
On Sunday night, the White House fired back with a report detailing what's at stake if the GOP continues its efforts to weaken the agency while blocking it from performing key aspects of its work.
The report, "Improving Americans' Financial Security," is subtitled "The Importance of a CFPB Director." It lays out the case for why the agency will be hamstrung until a director gets confimed. President Obama has nominated Richard Cordray, a highly regarded former Ohio attorney general who has won bipartisan backing - outside the halls of Congress, that is.
Without a Director, the CFPB cannot fully supervise non‐bank financial institutions such as independent payday lenders, non‐bank mortgage lenders, non‐bank mortgage servicers, debt collectors, credit reporting agencies and private student lenders. Without a Director, Americans will not be protected from falling prey to many of the harmful practices that contributed to the worst financial crisis since the Great Depression.
CFPB’s inability to exercise its full authority while it awaits a Director affects the lives and financial security of tens of millions of American families who rely on non‐bank financial institutions for their financial needs. Indeed, whether it is shopping for a mortgage or private student loan, or having one’s credit report used in a lending decision, many middle class families are reliant upon non‐bank financial actors.
A CFPB without its full authorities is also hamstrung in its ability to help level the playing field between small banks and nonbank financial service providers. For too long, banks were playing by one set of rules, while other parts of the financial industry, like some payday lenders or independent mortgage brokers, were playing by another, often with little or no oversight.
The GOP's resistance is plainly a winning position with many of the financial institutions and lobbyists who fought the new consumer-protection agency from the start, and with conservative and libertarian ideologues who believe the country needs less financial regulation, not better financial regulation.
It's less clear that voters agree with them, which is probably why the White House and Senate Democrats are pushing for a vote this week on Cordray. An unexpected break in ranks would allow the agency to go forward with the job envisioned by Obama and Elizabeth Warren, the Harvard professor-turned-U.S.-Senate candidate who first proposed the agency. Continued resistance gives Obama an issue that illustrates how Republicans are doubling down on deregulation despite its widely recognized role in the 2008 financial crisis and the ongoing economic slump. It's no surprise that Warren's opponent, Sen. Scott Brown (R., Mass.), is one of the few Republican senators to have so far broken ranks to call for "an up or down vote on the Senate floor."
Click here to download the report. For a preview of an argument you can expect to hear repeatedly if the GOP continues to block Cordray, here's how it begins:
A little over a year ago, the President overcame the fierce lobbying from the financial industry and signed into law the Dodd‐Frank Wall Street Reform and Consumer Protection Act. The new law put in place reforms that reduce excessive risk‐taking on Wall Street, as well as protections that encourage a strong, stable financial system that can support sustained economic growth.
The Act also established the strongest consumer protections in our history, for the first time charging one agency—the Consumer Financial Protection Bureau (CFPB)—with the responsibility of protecting and educating Americans who use financial products. Implementation of Wall Street Reform and the stand‐up of the CFPB have already started transforming our financial system and benefiting consumers by ensuring that financial service providers compete on the basis of the services they provide and not on hidden fees or other harmful practices.
However, one of the most important components of Wall Street reform is putting in place a Director of the new CFPB. It is only with a Director that the CFPB can exercise its full authorities and make good on the consumer protection goals of Wall Street Reform.