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Obama appoints new head of CFPB

Richard Cordray testifies during his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee on Captiol Hill September 6, 2011 in Washington, DC.

Steve Chiotakis: President Obama is on his way to Cleveland today, where he's scheduled to give a speech on the economy. He's traveling with Ohio's former attorney general, Richard Cordray. The president plans to use a recess appointment to name Cordray as head of the Consumer Financial Protection Bureau.

Marketplace's David Gura is with us live from our Washington bureau with the latest on the waves from all this. Hey David.

David Gura: Morning Steve.

Chiotakis: So now that Cordray is about to get this job, what's going to change for consumers do you think?

Gura: I think it's fair to say that the Consumer Financial Protection Bureau has done as much as it can so far. Under Elizabeth Warren, who headed it on its interim basis, it waded into the home mortgage market. The CFPB suggest changes to credit card contracts and to student loans. The Bureau was certainly listening to and advocating for consumers, but it lacked teeth. And that's because it didn't have a permanent head and without that the CFPB didn't have a whole lot of legal authority. Now I just talked to Bart Naylor. He's not unbiased here. He's a consumer advocate with a group called Public Citizen that's been advocating for this sort of recess appointment. He told me that Cordray, companies will have to change the way they do business.

Bart Naylor: Consumers can finally win some relief from these outrageous fees, from these outrageous business practices.

Chiotakis: So, David, this recent appointment is sure to anger Republicans. Will it change what the watchdog can do?

Gura: I don't think that we know what the practical impact will be but we're certainly seeing the political impact already. The Senate minority leader Mitch McConnell just put out a statement and he said president Obama is "uncertain legal territory." And John Boehner, the speaker of the House, said "this is an extraordinary and entirely unprecedented power grab." Now, they both questioned the legality of this. They say the House and the Senate never adjourned for the holidays, Steve. Congress has been holding what are called "pro forma" sessions -- keeping the lights on so that this very thing couldn't happen.

Chiotakis: Those lights have been on for a long time, I'm sure.

Gura: Exactly. And I assume that we're going to hear more from the president and the White House about the legal justification for this as the day goes on, Steve

Chiotakis: As the day goes on... Marketplace's David Gura in Washington. Thanks David.

Gura: Thanks Steve.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.

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