October 9, 2024

Richard Cordray, New Consumer Chief, Promises Vigorous Agenda

The director, Richard Cordray, who was appointed to the post Wednesday by President Obama, encouraged consumers to contact the agency with their stories and complaints about banks, payday lenders and other financial institutions that they feel have sold deceptive products or engaged in abusive behavior.

“The consumer bureau will make clear that there are real consequences to breaking the law,” Mr. Cordray, who had been in charge of enforcement at the agency, said in a speech at the Brookings Institution.

“We have given informants and whistle-blowers direct access to us,” he said. “We took over a number of investigations from other agencies in July, and we are pursuing some investigations jointly with them. We have also started our own investigations. Some may be resolved through cooperative efforts to correct problems. Others may require enforcement actions to stop illegal behavior.”

Asked whether he would hesitate to use any of the bureau’s new rule-making or enforcement powers given that his recess appointment could draw a legal challenge and has drawn sharp criticism from Republican members of Congress, Mr. Cordray said no.

“The appointment is valid,” he said. “I’m now director of the bureau.”

Mr. Cordray was nominated by President Obama last year, but Senate Republicans blocked his nomination from coming to the floor for a vote. Opponents in Congress and in the banking and business sectors have said that the agency has too much power and autonomy and lacks adequate financial oversight and review of its regulatory actions.

He said that he did not take the Congressional opposition personally. “They, after all, represent the same people that we are serving,” he said. “We really have the same interests, I believe, at heart.” Nor, he said, did he question the motives of critics of the agency, and he said he intended to try to work with members of both parties in Congress.

“I’m not someone who impugns people’s motives,” he said. “That’s not my way. I don’t think that’s helpful. I tend to assume that people are always trying to do what they think is right. We may just disagree at times on what that is.”

The agency will focus most immediately on the so-called nonbank financial companies — money transfer agencies, credit bureaus and private mortgage lenders, for example — that previously have fallen outside the authority of most bank regulators and consumer protection agencies, Mr. Cordray said.

Although the consumer agency was given authority over those types of companies in the Dodd-Frank Act, the regulatory overhaul passed in the wake of the financial crisis, those powers could not take effect until the bureau had a director.

“Today, we are launching the bureau’s program for supervising nonbanks,” Mr. Cordray said. “Many provide valuable services to customers who lack access to other forms of credit. And they are big markets. Nearly 20 million American households use payday lenders and pay roughly $7.4 billion in fees every year.

“Many subprime loans during the housing bubble were made by nonbank mortgage brokers,” he added. “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.”

Mr. Cordray asked consumers to contact the agency directly through its Web site, consumerfinance.gov. “Our team is taking complaints about credit cards and mortgages, with other products to be added as we move forward,” he said. “Our work will support the honest businesses in financial markets against those who deceive consumers or otherwise break the law.”

The public appearance by Mr. Cordray, who has kept a low profile since being nominated to the post, was arranged quickly after the announcement Wednesday of Mr. Cordray’s appointment, which was made without Senate approval under the constitutional provision for making appointments when lawmakers are in recess.

Mr. Cordray’s remarks seemed intended to show that the agency would move promptly and aggressively, in the hope that getting public support could quell some of the criticism from members of Congress.

Several members of Congress vowed on Wednesday to try to overturn the appointment, and one House subcommittee summoned Mr. Cordray to a hearing on Capitol Hill to discuss his agency and how he intends to manage it.

 

Article source: http://feeds.nytimes.com/click.phdo?i=6e53a87ba42b2626cab15181f6374cdf