CFPB at a standstill until director is approved
Richard Cordray awaits approval to sit as the head of the Consumer Financial Protection Bureau.
Steve Chiotakis: President Obama launches a seven state road trip today to support the man he tapped for the Consumer Financial Protection Bureau -- the CFPB. He's former Ohio attorney general Richard Cordray. But Republican senators vow to block any nominee until the bureau itself gets overhauled.
Marketplace's Gregory Warner is with us live with the latest on that story. Hey Gregory.
Gregory Warner:Hey there.
Chiotakis: So the CFPB is up and running, but they don't have a director. What can the CFPB do right now?
Warner: Well, they can listen to complaints -- so if you think you credit card company, or your mortgage lender, or your auto lender, is guilty of unfair, deceptive or abusive practices, you can call the CFPB and tell them about it. They'll investigate, but they can't do much about it -- at least in terms of oversight -- until they have a director.
Chiotakis: So, the Republican opposition here -- and its not every Republican but enough of them to matter, right?
Warner: Right, so originally, of course, a lot of that opposition was focused on Elizabeth Warren -- the Harvard professor now Senate candidate who created the CFPB. Now the opposition, as you said, is on the CFPB itself. First, because its funding is independent of Congressional control; it can act independent of politics. That's seen as a bad thing by some.
The second complaint is a little more wonky. The Senators in opposition say that the CFPB should be focused not just, as it is, on consumer protection, but on something called "safety and soundness" of the financial industry.
Chiotakis: All right, so accountability I get -- give politicians more control -- but "safety and soundness," how would that change the CFPB?
Warner: It creates, at least, the perception of a conflict. You're telling the regulator of an industry they have to worry about keeping that industry healthy.
I called Lawrence Baxter. He's a law professor at Duke and a former VP at Wachovia. He says that's the same mission confusion that hampers other bank regulators.
Lawrence Baxter: The comptroller of the currency and the Fed have had conflicting missions, throughout their existence. The whole thinking behind the CFPB is: let's take a focused agency that is focused on consumer protection activities and have it sort of watch that side of the store.
Unfortunately, as we said, "watching the store" is about all they can do until they get someone in that director's chair.
Chiotakis:Marketplace's Gregory Warner, Gregory, thanks.