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Obama lets consumer watchdog out

by Broderick Perkins

(1/9/2012) - Wary of Republicans' fiddling while America's economy burns, President Barack Obama lived up to a promise and used special presidential powers to put Richard Cordray in place to head the Consumer Financial Protection Bureau (CFPB).

"I refuse to take 'no' for an answer. I am not going to stand by while a minority in the Senate puts party ideology ahead of the people we were elected to serve," Obama said at a political rally-like crowd of 1,300 at a high school in the Shaker Heights suburb of Cordray's Cleveland hometown.

With mortgage-related issues at the top of Cordray's to-do list, the CFPB was born of the massive Dodd-Frank Wall Street Reform Act as a consumer watchdog to ward off the kind of financial industry misadventures that helped put the economy in the tank.

The CFPB has long been a target of political stonewalling from Republicans, even as the agency mounted an impressive watchdog record of snapping to consumer issues including mortgages, mortgage fraud, credit cards and student loans, among others.

"The American people deserve to have qualified public servants fighting for them every day - whether it is to enforce new consumer protections or uphold the rights of working Americans. We can't wait to act to strengthen the economy and restore security for our middle class and those trying to get in it, and that's why I am proud to appoint these fine individuals to get to work for the American people," President Obama said recently in a prepared statement.

During a U.S. Senate recess, Obama used special powers to appoint former Ohio Attorney General Cordray to head the CFPB. He also assigned other officials to the National Labor Relations Board. The president has the authority to make appointments without a Senate vote when the Senate is in recess. As expected, Republicans whined that the Senate was not in recess, but virtually all Senators were out of town during Obama's appointment.

The CFPB officially opened in July 2011, followed by Obama's Cordray nomination that summer. The nomination was cleared by the Senate Banking Committee, but Republicans, who want to defang the watchdog agency by diluting its powers, had blocked a Senate vote to confirm Cordray unless they got their way.

That's not going to happen now, without a court fight. A court ruling would likely uphold the appointment.

Obama has judiciously used the recess-appointement power far less (29 times) than either George W. Bush (171) or Bill Clinton (139).

However, a court fight wouldn't be a surprise from Republicans who've spent much of the past four years fighting to undo achievements rather than actually creating any of their own.

With a director at the helm, the CFPB can now flex its regulatory muscle and target non-bank entities such as mortgage brokers and mortgage servicers, as well as speed up its ongoing efforts related to other issues, including simplifying mortgage borrower disclosures and shaping the definition of Dodd-Frank's "qualified mortgage."

Among a host of consumer protection efforts, the bureau in October 2011 released Supervision and Examination Manual.

The manual, with a special focus on mortgage servicing, is a guide to how CFPB will supervise and examine consumer financial service providers.

The agency's plate is full of a host of additional issues it will address.

The Consumer Federation of America (CFA) and other consumer advocates have noted financial practices that continue to harm consumers, including targeting military service members with payday loans and other predatory finances; mortgage foreclosure abuses, bank payday and overdraft loans with exorbitant fees and pre-paid credit card fees.

"The list of financial tricks and traps that consumers are forced to deal with keeps growing. Fourteen months after Congress created the CFPB, the agency needs a permanent leader so it is not fighting financial abuses with one arm tied behind its back," said Travis Plunkett, CFA's Legislative Director.

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