Here’s Why the GOP is Ranting Over the New Consumer Agency
The Bottom 99%
The firestorm of protest over the appointment of Richard Cordray as Director of the new Consumer Financial Protection Bureau offers a stark view of the modern Republican philosophy of deregulation at the expense of everyday consumers. This case study of conservative dogma flies in the face of overwhelming evidence that lax regulation of the financial sector played a central role in the unprecedented trillion-dollar economic crisis.
A look at the Agency’s mission helps to explain why blocking Cordray has been such a high priority for the GOP.
What Does the Consumer Financial Protection Board Do?
The CFPB’s website says its central mission is “to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products” such as student loans.
The agency says it will ensure “that consumers get the information they need to make the financial decisions they believe are best for themselves and their families.” This includes clear disclosure of prices and risks: making sure that “nothing is buried in fine print.”
Put simply, the CFPB’s job is to protect consumers from unfair, deceptive, or abusive practices.
In a blog greeting shortly after his appointment, Cordray says exercising the agency’s authority will mean that “markets operate fairly, transparently, and competitively.”
Two major initiatives are:
- “Know Before You Owe,” simplification of mortgage documents
- A review of the CARD Act of 2009 (which the CFPB says has dramatically reduced the number of credit card accounts subject to interest rate hikes in one year, from 15% of all accounts to only 2%)
Any problems with that “mission”? Sound good? Seem fair?
If you think this is all a pretty good idea, you may wonder why anyone would be dead-set against this kind of consumer protection – described by Hollywood Producer Ron Howard on the Agency’s website:
Why Are Republicans Against This Agency?
Republicans complain that the Agency concentrates too much power in a single individual as Director, and that because it falls under the Federal Reserve, it is not accountable to Congress.
However, the U.S. Treasury Department notes that the Agency is, in fact, subject to ”constraints, including ones that do not apply to any other federal banking regulator, to create full accountability and transparency to Congress and the American people. Treasury points out: “Congress may also overturn any CFPB regulation through legislation if it disagrees with the CFPB’s judgment.”
The Senate Committee on Banking, Housing, and Urban Affairs has published a comprehensive list of the means by which CFPB is accountable to Congress, clarifying that, “Similar to all regulatory agencies, the CFPB is subject to the Administrative Procedures Act and its final rules are subject to judicial review.” Some other constraints:
- The Director must report to Congress regularly
- CFPB is the only federal Agency with a statutory cap on its budget
- Subject to financial audit and review by the Government Accountability Office
What Does This All Mean?
Consider for a moment the implications of Republican obstructionism as the nation grapples with the ongoing repurcussions from the financial crisis. Until a Director was in place, the agency couldn’t oversee non-bank entities, which currently are not subject to federal regulation (think: “PayDay Loan” outfits which annually charge 20 million Americans interest rates of up to 400% on two-week loans, and fly-by-night mortgage scammers).
Republicans’ determination to sabotage the CFPB was obvious from the outset, prompting Harvard Professor and consumer advocate Elizabeth Warren to withdraw her name from consideration to lead the Agency she had helped to create. Republicans said they would not allow ANY director to take office unless certain “reforms” were made – including elimination of the post of Director!
The Nation characterized the Republicans’ demands as “nakedly transparent attempts to weaken the CFPB’s power,” also pointing out that the 45 Republican Senators who signed a letter to the White House have received over $125 million from the financial sector during their careers.
Is this all starting to make more sense now?
Final Thoughts About Recess Appointments
There may yet be a legal battle over President Obama’s installation of Cordray during Senate recess, after his Senate confirmation via the normal “Advice and Consent” process was blocked by Republicans. GOP leaders have skewered Mr. Obama, House Speaker John Boehner accusing the President of an “extraordinary and entirely unprecedented power grab,” which Senate Majority Leader Mitch McConnell added “arrogantly circumvented” the American people. Boehner summed up: “this position has not been filled for one reason,” repeating the GOP anti-regulation mantra that this Agency would be “bad for jobs and bad for the economy.”
White House Spokesman Jay Carney cited White House Counsel opinions that the appointment is perfectly valid, dismissing threats of a legal challenge over the fact that the Senate has been holding “pro-forma sessions.” Carney pointed out the Office of Legal Counsel under George W. Bush reached the same conclusion: that Senate recess is not interrupted by “pro forma sessions that are designed explicitly simply to prevent the President from exercising his constitutional authority.”
For some historical perspective: take a look at this chart from Mother Jones, and see for yourself how Mr. Obama stacks up against other recent Presidents in terms of “recess appointments” to install appointees blocked by the opposition party.
These are all the things to keep in mind when you hear Republicans cry “foul!”
Per January 6, 2012 “Political Animal” post by Steve Benen at Washington Monthly:
There was a bizarre scene on the House floor a couple of weeks ago, when Democratic lawmakers tried to bring up a bill, and House Republicans simply shut down the chamber. When Dems tried to at least have their say on the issue, GOP leaders shut off the cameras.
This morning, we saw a nearly-identical display.
The House is holding pro-forma sessions, apparently in the hopes of blocking President Obama’s recess-appointment power. Since the chamber would be open for business anyway, Assistant House Minority Leader James Clyburn (D-S.C.) decided he’d make some remarks about the payroll tax break.
But like two weeks ago, House Republicans refused to let him speak, banged the gavel, left the room, and again turned off the cameras.
The result is an odd GOP argument. When President Obama wants to raise the debt ceiling, congressional Republicans respond, “You can’t do that; we’re not in session.” When the White House wants to make recess appointments, congressional Republicans respond, “You can’t do that; we are in session.” And when James Clyburn wants to say a few words from the House floor, congressional Republicans respond, “You can’t do that; we’re not in session.”
I realize there have been some interesting legal, procedural, and semantics debates this week over what is and is not a “recess.” But if Republicans could just pick a line and stick with it, the discussion would be far more coherent.
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