On Thursday, Dec. 8, in a 53 to 45 vote, Senate Republicans blocked the nomination of Richard Cordray as the Director of the Consumer Financial Protection Bureau. Despite Cordray’s backing by 37 of the nation’s Democratic and Republican Attorneys General, Senate Democrats could not muster the 60 votes needed to approve the nominee. Only one senate Republican, Scott Brown of Mass., voted in favor of Cordray.
President Obama at a rally in Kansas two days prior said that if Cordray failed to win the nomination, consumers would lose:
Every day we go without a consumer watchdog in place is another day when a student, or a service member, or a senior citizen 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 theirs.
The Consumer Financial Protection Bureau was created last year as part of the Dodd-Frank financial reform legislation. The bureau acts as a watchdog, with the goal to eliminate predatory lending from nonbank entities such as student loan providers, mortgage originators and credit reporting agencies. These nonbank entities currently are not regulated by federal laws that relate to consumer financial protections. According to an administration report, that means that payday lenders can charge annual rates of 400 percent for borrowers, many of whom already struggle to pay their debt.
In an age where consumers are duped by predatory lenders all the time – be it student loan providers, debt collectors or payday lenders – it would seem creating an agency whose sole responsibility it is to make sure the consumer is protected would be a no brainer for Republicans and Democrats alike.
Republicans have not said they found fault in Cordrary’s credentials. His credentials, by the way, include clerking for the Supreme Court, serving on the Ohio State legislature, and service as Ohio’s State Treasury and Attorney General. Republicans claim that their opposition to Cordray, or any nominee for that matter, stems from what they see are key changes that need to be made at the agency. Republicans demand eliminating the director’s position and creating an oversight board instead and requiring the agency to get congressional approval of its budget. Not permitting it to draw funds from the Federal Reserve.
However, Republicans have given little hope that they would be satisfied even if their demands were met. At the root of this issue is that there are several powerful financial lobbyists in Washington D.C. who would like to see that this agency never gets off the ground. And several of those lobbyists have been and are knocking on the doors of your Republican senators because the banking industry does not want to be regulated any more than it is. Or as Sen. Sherrod Brown (D-Ohio), said “In other words, to protect their Wall Street friends, they’re not going to allow a director to be in place unless you weaken this agency.”
It is deregulation that lead to our nation’s financial crisis – a crisis we as a nation are still trying to pull out of. At this critical time, when the average consumer is trying to get back to a place of financial stability, it needs the Consumer Financial Protection Bureau, and it needs that bureau to have a director. The consumer cannot afford to lose another battle to Wall Street.