Talking Points

Confirm Richard Cordray as Director of the CFPB


THE CONSUMER FINANCIAL PROTECTION BUREAU’S WORK IS CRUCIALLY IMPORTANT
This is the agency created after the 2008 financial crisis to establish basic rules of fairness and transparency for mortgages, credit cards, student loans, auto loans, debt collection and other banking and lending products. In its short life, the Consumer Bureau (or CFPB) has already returned nearly half a billion dollars to consumers cheated by credit card companies; moved to rid the mortgage market of loans engineered to fail; protected military families against illegal foreclosures and other abuses; and warned auto lenders against practices that jack up the cost of credit for African-Americans, Latinos, women, or seniors.

Now the CFPB is turning to a range of other important issues, including stiff bank overdraft fees, abusive debt collection practices, and the predicament of students and families trapped in high-cost private education loans.

THE CFPB IS UNDER ATTACK
A minority of Senators are blocking the re-nomination of its director, Richard Cordray, while demanding changes that would undermine the agency’s effectiveness. They want the CFPB placed under a commission chosen by party leaders, and they want it funded through annual congressional appropriations rather than, as the law provides, through a share of the budget of the Federal Reserve, where the agency is housed.

The “reforms” they seek would subject the CFPB to partisan gridlock and political intimidation. The results would be terrible for consumers. Big banks and predatory lenders, who fought hard to prevent the CFPB’s creation, would be the winners.

SUPPORT FOR CORDRAY AND THE CFPB’S WORK IS BROAD AND BIPARTISAN
In a national survey conducted last July, two-thirds (66%) of voters agreed on the need for such an agency. Ninety-two percent expressed support for measures requiring banks, mortgage lenders, credit card companies, and student and auto lenders to provide clearer explanations of rates, terms and fees (97% among Democrats, 94% among independents, 85% among Republicans).

A more recent survey shows eighty-four percent of small business owners (a majority of them Republicans) supporting the bureau. Even many financial industry leaders have praised it as a fair and reasonable regulator. The president of the Mortgage Bankers Association recently paid tribute to “the deliberative, inclusive, transparent process” of the CFPB’s work on rules to prevent a resurgence of the unaffordable mortgages that produced the 2008 financial crisis and the foreclosure epidemic.

THE CFPB NEEDS A CONFIRMED DIRECTOR
In January 2012, Cordray received a recess appointment after the Senate failed to act on his original nomination. That appointment runs out at the end of the year. Without a confirmed director, the CFPB could lose a critical piece of its authority over payday lenders, check cashers, debt collectors, and other nonbank entities. Some of the worst actors would thus be free to continue peddling abusive products. Perhaps even more frighteningly, banks could make a competitiveness argument for their right to sell the same kind of shabby products as fringe lenders.

OPPONENTS OF THE CFPB ARE MISUSING THE CONFIRMATION PROCESS TO TRY TO NULLIFY THE LAW AND UNDERMINE THE AGENCY
Senate confirmation should be about evaluating a nominee’s qualifications. Yet many of the Senators threatening to block a vote on Cordray admit that he is well-qualified. One of them, Oklahoma Senator Tom Coburn, has praised Cordray for doing “a wonderful job so far in carrying out your duties.”

Their real purpose is to undermine the bureau’s ability to stand up to the financial industry. “If I had my way, we wouldn’t have the agency at all,” Senate Minority Leader Mitch McConnell reminded an audience of bankers several months ago. McConnell did not have his way, the first time around. But now, three years after the CFPB was approved by Congress, affirmed by the President, and applauded by voters across party lines, McConnell and just about all his fellow Republican Senators are out to squelch it – by refusing to confirm a director unless their demands are met.

Contrary to its critics’ claims, the CFPB is just one of a number of financial regulators with single directors and independent funding – the two main characteristics they want to change. Yet the Senators demanding changes have shown no great desire to reform other agencies with similar funding and leadership, such as the Office of Comptroller of the Currency. Moreover, the consumer bureau already faces serious checks on its authority, including a provision of the law making its decisions, unlike those of other bank watchdogs, subject to veto by a committee of financial regulators known as the Financial Stability Oversight Council.

WHAT THEY’RE ATTEMPTING IS UNPRECEDENTED AS WELL AS UNDERHANDED
In December 2011, when the Senate failed to act on Cordray’s original nomination, it was the first time a political party had ever blocked a nomination because they didn’t like the construction of the agency. “We searched through past cases,” Senate historian Donald A. Ritchie told PolitiFact Ohio, “and could not find anything that fit the current circumstance.”