The Star-Ledger

Republicans Seek To Handcuff Consumer Financial Protection Bureau

The Star-Ledger — Thursday, July 28, 2011

By Star-Ledger Guest Columnist
Phyllis Salowe-Kaye

Consumers finally have cause to celebrate. On July 21, the landmark Consumer Financial Protection Bureau became the nation's chief consumer financial oversight agency.

The implementation of this part of the Dodd-Frank Wall Street reform and Consumer Protection Act represents a historic step toward protecting average Americans from the deceptive and dangerous banking practices recognized as a primary cause of the 2008 financial crisis. The celebration, however, will be short-lived if efforts by Republicans in Congress to dilute the agency's effectiveness are successful. The GOP threatens to oppose any nomination for a director unless the bureau's authority is weakened.

House of Representatives Bill 1315, which passed on July 21, would handcuff the bureau and give banking regulators the power to block needed protections.

The bureau's sole purpose is to protect consumers. It will not tolerate risky and harmful banking products and services that offer only short-term benefits and extensive risk to consumers, and that are designed strictly to maximize lender profits. The agency will have the authority to create rules whenever there are abusive practices that clearly interfere with the ability of consumers to understand risks, costs or conditions associated with products and services, including mortgages, credit cards, overdraft fees, student and payday loans, and more. The agency also must have very strong independent leadership in order to enforce these rules and to police the current culture of quick profit and reckless financial product development. The House proposal would grant regulators the powers to block the bureau's rules.

Elizabeth Warren was hired by President Obama to create the Consumer Financial Protection Bureau. Though she was widely endorsed as the best candidate to direct the agency, Warren was vigorously opposed by an anti-reform faction in Congress. Her opponents view the agency as an impediment to the record-breaking profits that financial institutions are still making -- even in the aftermath of the 2008 financial crisis and while average Americans continue to face scamming, foreclosures, financial ruin and unsecured futures.

Richard Cordray, a former Ohio attorney general, has been tapped for the director's job and comes with a strong endorsement from Warren, who hired him to head the enforcement arm of the bureau. Cordray is well-respected in Ohio for his integrity, intelligence and fairness, and has a proven track record of fighting for families during his time as head of the bureau's enforcement division.

Despite Cordray's qualifications, his confirmation by the Senate is not guaranteed.

Shockingly, 44 Republican senators pledged this year they would not confirm any nominee unless the bureau's powers were gutted.

After the economic collapse in 2008, Congress did not hesitate to ask taxpayers to bail out the banks. Yet, it wasn't until 2010 that they finally enacted legislation to protect consumers from a repeat of that economic disaster. Now, these 44 senators refuse to confirm a director. The GOP is clearly intent on crippling the Consumer Financial Protection Bureau, and denying the public a protector and advocate in the woefully underregulated world of consumer finance.

We must block this assault on the desperately needed financial oversight and protections provided by the bureau. We must contact our senators to insist that they defeat the House proposal to limit the bureau's reach and urge them to confirm Cordray as the agency's director.

Phyllis Salowe-Kaye is the executive director of New Jersey Citizen Action, a consumer advocacy group with offices in Newark.

Top Top | NJCA in the News | NJCA Homepage