Barney Frank on the future of the Consumer Financial Protection Bureau
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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.