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President’s Recess Appointment Gives Watchdog Teeth It Needs To Protect Consumers From Wall Street Financial ShenanigansSubmitted by PennPIRG on Thu, 01/05/2012 - 3:21pm.
By Edmund Mierzwinski and Alana Miller
Kudos to President Obama for standing up for consumers this week by making a recess appointment of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau. The President’s action means that the CFPB now has all its powers to protect the public from unfair financial practices, whether by banks or other financial firms, such as payday lenders and credit bureaus.
Since July 21, the CFPB – a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act – had been up and running, but only with partial powers. It is the nation’s first federal financial regulator with only one job – protecting consumers, including seniors, students and servicemembers, from unfair financial practices.
Now with a director in place, the CFPB has additional abilities that kick in, including the right to supervise payday lenders, mortgage companies, credit bureaus, debt collectors, private student lenders and other non-banks. It also now has additional powers over banks and credit card companies.
Along with civil rights, labor, senior and consumer groups, PennPIRG had long urged the Senate to confirm Cordray, the former Ohio Attorney General, to direct the CFPB. Recently, 37 state Attorneys General, on a bi-partisan basis, had sent a letter to the Senate urging confirmation.
Yet, at the behest of both the Wall Street banks and the payday lenders, some Senators had opposed confirmation of any CFPB director. 45 Senators, including Pennsylvania’s own Senator Toomey, had written the President in May and told him that they would block confirmation of any director until and unless the CFPB’s independence and authority were first restricted. Then, on December 8th, 45 Senators blocked Cordray’s nomination. They wanted the CFPB weak and powerless and with a tin cup in hand.
The Inquirer today has an editorial calling for help for struggling homeowners. It mentions a rescue fund that Rep. Dwight Evans and Rep. Pete Daley called for here in Philadelphia back on May 11th. I testified on behalf of PUP on the need for such a fund at a hearing that same morning.
Status report from the editorial. Basically, still at Square One:
The Homeowner's Equity Recovery Opportunity (HERO) program, is intended to help homeowners in the direst situations, including where, because of inflated appraisals by lenders or a fall in housing values, the amount of the mortgage is larger than the value of the house.
Brian Hudson, who heads the Pennsylvania Housing Finance Agency, which created HERO and a separate "refinance fund," still hopes to receive state money.
For now, he is dipping into PHFA's reserve funds and reaching out to individual municipalities and foundations to come up with enough money to get things going. PHFA needs the start-up money to back bonds it would issue to pay for the HERO program.
So why should you care? First of all, if banks and lenders don't get paid back, credit is going to become more expensive. The money supply will be lower. That's basic economics.
Here in Philadelphia, though, it's a much bigger deal. I think we need rescue funds and that the Commonwealth should step up, but there's also some commonsense steps that the lenders themselves could take, and stay in the black in the bargain.