Michael Houghton for The New York TimesRichard Cordray, President Obama’s choice to lead the new Consumer Financial Protection Bureau.
The Consumer Financial Protection Bureau formally opened for business on Thursday, much to the consternation of Congressional Republicans.
But as conservative lawmakers step up their attacks on the new regulator, aiming to undermine its structure and authority, champions of the bureau are pushing back.
Consumer groups released a new opinion poll this week that showed broad public support for the bureau. And on Thursday, advocacy organizations issued a report detailing “ten reasons we need the Consumer Financial Protection Bureau now.”
The reasons boil down to a widespread lack of confidence in other regulatory agencies, which “manifestly failed to address” consumer protection problems in the run-up to the financial crisis, according to the report. The problems included “unchecked predatory” mortgages, the “lack of consumer legal rights” and “private student loan rip-offs.”
“Congress shouldn’t forget that a lack of consumer protection led to the Wall Street-led collapse of the economy and only a consumer cop on the beat can protect consumers from it happening again,” Ed Mierzwinski, the report’s author and the consumer program director of the U.S. Public Interest Research Groups, said in a statement. “This report is particularly timely because there are serious efforts to undermine the C.F.P.B. on Capitol Hill.”
The Republican criticism has centered on the consumer bureau’s power and its leadership. The Republican-controlled House has introduced measures to slash the bureau’s budget and subject it to greater Congressional oversight. Now that President Obama has nominated Richard Cordray to lead the bureau, Republicans attempts to derail his nomination are already in motion.
The Consumer Financial Protection Bureau was a chief component of the Dodd-Frank financial regulatory law, enacted a year ago Thursday. While the bureau opened last year, it did not officially inherit its broad new authority until the first anniversary of the law. The bureau can now write new rules for Wall Street, examine the books of some 110 banks and issue enforcement actions.
“This agency is ready to be a cop on the beat for American families — and I couldn’t be prouder,” said Elizabeth Warren, the Obama administration official charged with setting up the bureau.
On Thursday, the bureau sent “introductory letters” to bank chief executives, outlining its plans to supervise and examine their financial institutions. The bureau also revamped its Web site, where consumers can now file complaints about their credit cards.
“Today is an important day for consumers,” Lisa Donner, executive director of Americans for Financial Reform, said in a statement. “The C.F.P.B. will level the playing field for families, making the consumer credit market work for borrowers and lenders alike and making the whole economy safer.”
Recent poll results suggest that consumers agree. The poll, conducted by Lake Research Partners, a Democratic polling group, and backed by an array of progressive groups, found that nearly three-quarters of people surveyed support the bureau.
“Everyday Americans know what’s good for their pocketbooks, their families, and our economy — that’s why a large, bipartisan majority is calling for financial reforms to take effect,” Mike Calhoun, president of the Center for Responsible Lending, said in a statement about the poll. “Let’s hope policymakers hear them loud and clear.”
Consumer Bureau’s Letter to Bankers
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