Barney Frank on the future of the Consumer Financial Protection Bureau

The consumer bureau was supposed to be a key part of Congressman Frank's financial reform law, the Dodd-Frank act. He's frustrated with Republicans who voted to block the confirmation of a director.

Kai Ryssdal: As was entirely expected, today Republicans in the Senate blocked the nomination of Richard Cordray to be the head of the Consumer Financial Protection Bureau. Wouldn't even let it get to an official up or down vote.

The CFPB is the centerpiece of the Dodd-Frank financial reform bill that passed last year. So we called one of the guys whose name is on the thing to ask what should happen now. Democratic Congressman Barney Frank is the ranking member of the House Financial Services Committee. Welcome to the broadcast.

Barney Frank: Thank you.

Ryssdal: Setting politics aside for just a second -- we'll get there in a minute -- but what are the practical effects of the CFPB not having a confirmed director? What can't it do?

Frank: There are a whole set of things that cannot literally do legally. We gave the CFPB in the law the existing statutory powers to protect consumers, which apply mostly to banks, to deposit-taking institutions. We, however, wanted to get to the non-banks, and people have noted, well that's very important because there are a lot of problems with the non-banks. So payday lenders, check cashiers, people who are in the remittance business -- all of these people who do financial services who are not currently regulated by the Federal Reserve or the control of the currency -- that's the set of powers that will not be there until we get a confirmed director.

Ryssdal: All right, so let's get to the politics then: What does, if anything does, a compromise look to you on this?

Frank: Well I don't mean to be rude, but --

Ryssdal: Go ahead.

Frank: Since you don't have a vote in the Senate, I really can't negotiate with you.

Ryssdal: But no, seriously. What does a compromise look like?

Frank: A compromise to me is that you follow the law as passed. This is an outrageous effort by the Republican minority in the Senate to use the confirmation power in lieu of legislation. If they want to try and change the law, they can try and change the law. I think this is one that we may have to take to the American public. I don't think the public is ready to give in to demands that the bank regulators be put back in charge of consumers, which is the major Republican demand.

Ryssdal: So how are you going to take it to the American people? What does that mean?

Frank: Well, the election next year. This, I think, is an issue that Republican senators who voted not to allow an up or down vote, who've tried to wrench the Constitution out of shape and use the filibuster as a way to undermine consumer protection rather than take it head-on legislatively -- let them defend that in the election.

Ryssdal: Do you think the president should make a recess appointment in this case?

Frank: Oh without question. When the Republicans -- remember, they didn't reject Mr. Cordray in regards of any concern about his merits. When the Republicans say, 'We are not going to allow the process to work, we're not going to even consider a confirmation because we don't like the law which sets up the agency,' then of course a recess appointment is called for.

Ryssdal: You're going to campaign for Elizabeth Warren this fall, the woman who many thought would be the director of the CFPB?

Frank: Yes. In fact, as I've said, I used to be the person in America most disappointed that the president didn't appoint her, but now Scott Brown is the person most disappointed; I'm second.

Ryssdal: Scott Brown, who took Teddy Kennedy's seat. Last question for you, Congressman: You know, the White House knew back in May that the Republicans were not going to go for this -- was there not time to compromise back then?

Frank: No, I don't know why you keep talking about a compromise.

Ryssdal: Because that's the way government is supposed to work, right?

Frank: It is. No, here's how government's supposed to work: The Constitution sets up two separate processes -- legislation, you vote on things, you get majority in both Houses or you get two-thirds override in the Senate, and you can change something; the other is confirmation, once there's an entity in place, it's their duty to vote yes or no. And to allow them to blackmail you by refusing to do the confirmation process into changing things is a great mistake. And to weaken an independent consumer bureau -- look, the main thing the Republicans want is to say that the bank regulators who frankly haven't done a very good job of consumer protection over the years, should be back in charge and should be able to overrule this independent bureau. Nobody's asked if the bureau will be able to overrule the bank regulators and their jurisdiction. So no, what compromise means in this case unfortunately just means weaken.

Ryssdal: Congressman Barney Frank, Democrat from Massachusetts. Thanks for your time, sir.

Frank: You're welcome.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
Log in to post5 Comments

Amen to cwals99@yahoo.com. Kai, make sure you understand voting procedure before making comments about compromise. These issues are murky enough already.....

Once again, Kai Ryssdal is showing us his transition into corporate media. The background question Kai failed to ask was this: ' When a majority votes and wins the passing of legislation, when did the opposing minority then use the vote for political appointments of directors to agencies become the norm?' Republicans are obviously doing this with all Democratic appointments and this is one major reason for the disfunction in congress. Barney is right....there is no need to compromise.
A question for Barney is why didn't Democrats work this issue to a better conclusion with a supermajority......why is the director needed for the agency to have teeth? It will come down to the rule of 60 majority needed....hasn't this rule of 60 worked against the American people enough to remove it?

David Brooks (NYTimes) wasn’t a big fan of Barney Frank and it wasn’t ideological. Below are his comments on the PBS Newshour (12/2/11)…

“You know, you go to Capitol Hill, and we see -- just on the show today -- there are these scrums, where these reporters surround the politicians. And most of them are like us, who are sort of middle-aged guys, and we can take it. But there's always a bunch of young people who are just learning the trade. And they're nervous.

And I just saw Barney Frank as cruel to them on a couple of occasions, needlessly cruel. And I'm sure he did a lot of good things, but that needless cruelty always put me off. And that's the lingering memory I have.”

Barney Frank refused, for such a long time, to admit any responsibility for the Financial Crisis. Both political parties are to blame, and not just the private sector as is their talking point. I just continue to be appalled at Barney Frank’s hypocrisy (second only to Nancy Pelosi’s).

There has been plenty of discussion about Barney Frank’s support of the Community Reinvestment Act, encouraging lenders to relax their credit standards. The goal of promoting home ownership sounds reasonable so I can forgive him for yet another example of unintended consequences by Congress.

What makes my blood boil is the often overlooked fact that Barney Frank and Chris Dodd failed to regulate credit default swaps, despite repeated warnings. And when a bill was finally drafted in 2006 to, in essence, classify credit default swaps as insurance (requiring adequate capital reserves, possibly putting some breaks on the mortgage market), it never reached the floor because the chairman of the banking committee, one Mr. Barney Frank, refused to allow it.

His political affiliation, sexual preference and net worth do not impact my opinion of him. I just think he’s a poor representative of the people. A political gangster, with zinger one-liner sound bites, who puts self-interest first.

The ultimate slap-in-the-face was instead of losing power for his contributions to the country’s financial problems, he was allowed to co-author the sweeping federal regulatory solution, the Dodd-Frank financial reform bill.

…makes me physically ill.

With Generous Support From...