Help now is on the way if you think your payday loan is too expensive, if your school lender is ripping you off, if your mortgage is at risk of cancellation or if a debt collector is giving you a hard time. Just go to www.consumerfinance.gov or call 855-411-CFPB (2372) and ask for assistance from the Consumer Financial Protection Bureau.
President Obama enabled the bureau to police these nonbank businesses by making a recess appointment of Richard Cordray as director. By law, the bureau had to wait to act until it had a director. Mr. Cordray already was regulating banking institutions as chief of enforcement at the agency while awaiting Senate action on his confirmation as director. Senate Republicans were holding it up as a lever to force structural changes in the bureau, which the White House said would weaken it and Republicans said would add accountability.
Mr. Cordray started off regulation of nonbanks with a blog post inviting consumers to call him “Rich” and “tell us your stories today.” He said, “Consumers need to have someone who will stand on their side, who will protect them against fraud and who will ensure that they are treated fairly.”
This unabashed advocacy for consumers has been lacking in modern government. As the economy, telecommunications and other parts of 21st century life become increasingly complex, it is a proper role of government intervene on behalf of average residents.
The new agency’s supervision of large banks, thrifts and credit unions began in July. Nonbank supervision, which commenced Jan. 5, is starting with the overseeing of payday lenders, private education lenders and mortgage companies, including originators, brokers, servicers, loan-modification services and foreclosure-relief services, regardless of their size. The bureau will supervise only the larger businesses in other markets — debt collection, consumer reporting, auto financing and money services.
Mr. Cordray said, “Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them. But we must establish clear standards of conduct so that all financial providers play by the rules.”
The recess appointment, made while Congress was away for the holidays, was akin to actions taken hundreds of times by former presidents of both parties. As in recent years, Congress has been holding unattended “pro-forma” sessions during recesses, trying to prevent recess appointments. Republicans are outraged, but Lawrence H. Tribe, a Harvard law professor, wrote that the appointment was constitutional and that the administration could win any lawsuit to contest it in a “slam-dunk” victory.
With this action behind him, Mr. Obama may make additional recess appointments in February during an expected Presidents Day holiday recess if Senate Republicans continue to hold up scores of other pending nominations.
Senate Republicans had unanimously pledged not to confirm Mr. Cordray until the bureau’s structure was changed. They wanted it headed by a bipartisan board like some other federal agencies. But this bureau’s charter goes beyond regulation and makes it a protector of ordinary residents in a financial system with many abuses and little recourse. Critics also wanted congressional control of its financing, instead of letting the Federal Reserve fund it. But the White House so far is preventing the Republicans from starving its funding.
Fortunately, Mr. Obama has defied the critics and gone ahead to install Mr. Cordray as director of a much-needed consumer protection agency.