Having successfully alienated black, Latino and women voters, congressional Republicans now seem determined to add consumers to the hit list. Consider that Friday, 43 Senate Republicans sent a letter to President Barack Obama promising to block his appointment of Richard Cordray to head the Consumer Financial Protection Board until the board’s structure is changed.
For change, read “neutered.”
Republicans didn’t like the CFPB when it first was proposed. They didn’t like it when it was included in the Dodd-Frank Financial Reform Act of 2010. They didn’t like it in 2011 when Mr. Obama first nominated Cordray, a former Ohio attorney general, to head the board. They blocked that appointment, and they didn’t like it when Obama made Cordray a recess appointment instead.
So now Obama again has submitted Cordray’s name, and they still don’t like it. The board would have too much independence, they say.
More accurately, the filibuster rule gives the minority too much clout. The GOP senators don’t like the CFPB for the same reason they always haven’t liked it: Banks, credit card companies and other lenders want consumers to stay in the dark.
And since the banking, finance and insurance sector spent $638 million in federal campaign cash in the last election cycle, and nearly $500 million more last year lobbying Congress, Republicans — and a lot of Democrats, too — well, consumers be damned. Let’s face it: Had Senate Majority Leader Harry Reid, D-Nev., changed the filibuster rule, this wouldn’t be happening.
Despite the uncertainty, Cordray and the CFPB took significant steps last year. They obtained $425 million in refunds for consumers subjected to deceptive practices. They created new rules for “qualified mortgages,” that require lenders to make sure borrowers can pay and ban gimmicks like interest-only payments that can drive up principal. Lenders get protection from lawsuits by aggrieved borrowers. The board demanded disclosure from credit card companies that prey on college students.
Credit transactions, even those that appear simple, are loaded with fine print. The CFPB reads the fine print to make sure it’s fair. This is not to shortchange responsible lenders (as if that could happen) but rather to make sure that the playing field is a little more level.
In their letter to Obama on Friday, the 43 Republican senators (all of them but Bob Corker of Tennessee and Rob Portman of Ohio) complained that the CFPB has too much autonomy. They threatened to block Cordray’s nomination unless the CFPB is run by a bipartisan board and subject to congressional appropriators instead of being funded by the Federal Reserve.
This would shove the board back into the political arena, where wealthy contributors hold sway.
A more honest reason for the Republican objections was contained in an earlier letter sent to Obama in 2011. Then the GOP wanted assurances that enforcement of consumer regulations would not interfere with the financial health of banks.
Banks are pretty good at taking care of their financial health, except when they drive themselves into a ditch out of greed. It’s consumers who need help.
All of this could be rendered moot by an appeals court decision last month that said Obama’s recess appointments to the National Labor Relations Board were illegal. If the ruling is extended to other recess appointees (by the way, Obama has made far fewer of them than either George W. Bush or Bill Clinton), Cordray’s actions over the last year could be thrown out. Ironically, banks are worried that if this happens, it would create problems for them.
Eventually the appeals court’s strained and partisan decision could be vacated or reviewed by the U.S. Supreme Court. In the meantime, despite an act of Congress, financial interests will continue to hold consumers hostage. It’s a long time until Election Day, but consumers should remember that.