Lee: No to Cordray, No to CFPB

by Andrew Stiles

The Senate is set to vote tomorrow on the nomination of Richard Cordray for director of the newly established Consumer Financial Protection Bureau. President Obama brought this up in his speech on Tuesday:

Republicans in the Senate refuse to let [Cordray] do his job. Why? Does anyone here think the problem that led to our financial crisis was too much oversight of mortgage lenders or debt collectors? Of course not. Every day we go without a consumer watchdog in place is another day when a student, or a senior citizen, or member of our Armed Forces could be tricked into a loan they can’t afford – something that happens all the time. Financial institutions have plenty of lobbyists looking out for their interests. Consumers deserve to have someone whose job it is to look out for them. I intend to make sure they do, and I will veto any effort to delay, defund, or dismantle the new rules we put in place.

Republicans are expected to filibuster the nomination. Freshman Sen. Mike Lee (R., Utah) offers his take:

I have met Mr. Cordray, and my decision to oppose his confirmation by the Senate has nothing to do with his qualifications. Rather, I feel it is my duty to oppose his confirmation as part of my opposition to the creation of CFPB itself.

In the wake of the financial crisis, Congress passed the Dodd-Frank financial industry reform which has done very little to address the core reasons the financial collapse occurred. However, using the guise of “consumer protection”, Dodd-Frank did create an unaccountable new government bureaucracy that will invariably intrude into the lives of nearly every American with a checking account or a credit card.   

The financial crisis was not caused by a lack of consumer protection watchdogs.  The federal government has dozens of agencies and thousands of employees, not to mention 535 members of Congress, who supposedly perform oversight functions intended to promote competition and protect consumers. Yet, most of the questionable loans that were granted while the housing bubble was inflating were supported, required, or even created by the government itself.

The crisis was the predictable result of dangerously easy credit facilitated by the Federal Reserve and years of government policy promoting home-ownership-for-all at any cost.

The CFPB will change absolutely none of that. Instead, it is in the process of assuming power over all sorts of consumer financial products, including checking accounts, credit cards, and student loans. New system-wide regulations will actually have the effect of disproportionately harming small community banks and their customers through higher costs.

Even more worrisome, the new agency is designed to have the authority to affect practically everyone while having accountability to practically no one, and this authority is vested in a single acting director.

The CFPB has access to annual funding of roughly half a billion dollars that is provided by the Federal Reserve, rather than Congress. According to the Congressional Research Service, “These funds are not reviewable by either the House or Senate Committees on Appropriations,” making the CFPB entirely outside the realm of traditional appropriations controls… 

Confirming any director for this bureau would be tantamount to agreeing that we need a uniquely powerful super-agency that is not even designed to prevent a repeat of the financial crisis. Until the CFPB is reformed, I will not support it in any way.

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