Monday, July 18, 2011

The GOP vs. the Consumer Protection Agency: Will Cordray be any different than Warren?

One would think that after the type of recession that America just experienced (and to a large degree is still currently experiencing), which was created, in part, by the unregulated predatory lending practices of large financial institutions, that the creation of an agency to help the people avoid being preyed upon in the future would be a no-brainer.  But alas, this is America.  The land of the brave and the home of the stupid.  Here, in this country, we like to fight policies that would help us, and we like to support policies that go against our interests.  Case in point, the recent rally by Republican leaders to fight the Consumer Protection Agency.  From the L.A. Times:

In the eyes of some opponents of the Consumer Financial Protection Bureau in Congress and on Wall Street, Richard Cordray is no better a choice to direct it than Elizabeth Warren would have been.  In nominating former Ohio Atty. Gen. Richard Cordray to head the new Consumer Financial Protection Bureau, President Obama avoided the highly controversial choice of liberal favorite Elizabeth Warren — but not the controversy..."He was a crusading state attorney general who went after financial firms," said Jaret Seiberg, a financial services policy analyst for MF Global, a major derivatives broker. "The industry has good reason to be suspicious."

During his short time as Ohio attorney general in 2009-10, Cordray initiated several high-profile class-action cases against major financial firms on behalf of the state's pension funds. In separate securities fraud lawsuits, he obtained a $1-billion settlement from giant insurer American International Group Inc. and a $475-million settlement from Bank of America Corp. related to its acquisition of investment banker Merrill Lynch & Co.

A theme of Cordray's tenure filling the expired term of his predecessor was "Holding Wall Street Accountable." He narrowly lost reelection to Republican Mike DeWine last fall and was hired in December as the fledgling bureau's head of enforcement.

The U.S. Chamber of Commerce said it had "deep concerns" about how Cordray would use the agency's powers. As part of the agency's leadership, Cordray has worked with other regulators and state attorneys general to help settle investigations into botched foreclosure paperwork...

But Cordray faces a tough fight in the Senate. In May, 44 Senate Republicans — enough to mount a successful filibuster — promised to block the nomination of anyone to head the agency unless major changes were made in its structure. Among the changes they want is replacing the single director with a five-member bipartisan commission.

Obama said Monday that he opposed those changes, which he said were being pushed by "an army of lobbyists and lawyers."

The agency, the centerpiece of last year's Wall Street reform law, starts operations Thursday. Obama said the bureau was crucial to preventing the abuses that led to the financial crisis.

So even though Obama gave the position to Warren's second in command, will it make any difference with the GOP?
If not, should he have just kept Warren in the position anyway?
Is the Consumer Protection Agency a good idea?
Does the Consumer Protection Agency actually have teeth to get the job done that it was designed to do (help the people against large corporations)?

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