Posted 11:03 pm Monday, January 30, 2012
We Need More Than Just Promises From Watchdog
Well, that's reassuring.
The unvetted head of the powerful new “consumer protection” agency promises he won't abuse his broad authority. Honest.
The unvetted head of the powerful new “consumer protection” agency promises he won't abuse his broad authority. Honest.
“Richard Cordray, head of the Consumer Financial Protection Bureau, told lawmakers Tuesday that he would not abuse his power and promised that the agency would take action only against companies that break the law,” the Los Angeles Times reported last week.
“It is not our intention to start going off and acting like we're some sort of mini-Congress, just doing anything we think is good and right,” Cordray said in a House Oversight and Government Reform subcommittee meeting.
“It is not our intention to start going off and acting like we're some sort of mini-Congress, just doing anything we think is good and right,” Cordray said in a House Oversight and Government Reform subcommittee meeting.
You'll recall that Cordray was a recess appointment, made when the Senate wasn't actually in recess.
But Republican objections to Cordray's appointment wasn't so much about Cordray as they were about how the agency is structured. Like much of our activist president's new offices, the agency answers only to him.
But Republican objections to Cordray's appointment wasn't so much about Cordray as they were about how the agency is structured. Like much of our activist president's new offices, the agency answers only to him.
“The bureau was designed to be unaccountable to Congress,” says Alabama Republican Sen. Richard Shelby. “Its vast powers are vested in a single director who cannot be dismissed by the president for terrible policy decisions. During his five-year term, the director can determine not only how the bureau spends its more than a half-billion-dollar budget, but also how it regulates much of the American economy.”
Shelby notes the vast powers granted to the agency.
Shelby notes the vast powers granted to the agency.
“Because the director will decide whether and how consumers can obtain credit, the economic lives of nearly every American will be touched by this new federal bureaucracy,” he says. “A bureaucracy with that kind of power must be accountable to the American people.”
Shelby and other Republicans blocked the nomination for months, but for good reason.
“Gridlock is not inevitable,” he says. “Republicans are willing to preserve the bureau's broad authorities as long as Democrats agree to enact some common-sense reforms to its structure. The only obstacle would be if Democrats are more interested in a political issue than in the best interests of consumers.”
Yet Obama got his way, and Congress is getting — well, assurances.
As the Times reported, “The agency would follow existing interpretation of consumer laws covering financial products and ‘should not be going off in some wild, new unexpected direction' that would cause confusion among banks and other firms, he said.”
Shelby and other Republicans blocked the nomination for months, but for good reason.
“Gridlock is not inevitable,” he says. “Republicans are willing to preserve the bureau's broad authorities as long as Democrats agree to enact some common-sense reforms to its structure. The only obstacle would be if Democrats are more interested in a political issue than in the best interests of consumers.”
Yet Obama got his way, and Congress is getting — well, assurances.
As the Times reported, “The agency would follow existing interpretation of consumer laws covering financial products and ‘should not be going off in some wild, new unexpected direction' that would cause confusion among banks and other firms, he said.”
But promises are no substitute for structural accountability. In an interview with the Associated Press, Cordray hinted at just how broad his undefined powers are. They go beyond enforcing the law, to “ensuring fairness.”
“If something is technically legal, that's one issue,” Cordray said. “But we also have the authority to determine that practices are unfair, deceptive and abusive. That's where our authority can be used to try to protect consumers, even though maybe the technicalities of pre-existing laws have been followed.”
“If something is technically legal, that's one issue,” Cordray said. “But we also have the authority to determine that practices are unfair, deceptive and abusive. That's where our authority can be used to try to protect consumers, even though maybe the technicalities of pre-existing laws have been followed.”
He even expressed his belief that markets don’t work, at least not without the heavy hand of government keeping them “honest.”
“I have a lot of faith in the market if it is backed by evenhanded, comprehensive rules of the road that everyone knows they have to live by,” he said. “If the market is left to its own devices or if we regulate part of the market and leave the rest unregulated, as happened with the mortgage market, that created, in my view, a lot of what caused the financial meltdown — that’s never going to work.”
What won’t work is an incredibly powerful new agency regulated only by the promise of its director that he’ll play nice.
“I have a lot of faith in the market if it is backed by evenhanded, comprehensive rules of the road that everyone knows they have to live by,” he said. “If the market is left to its own devices or if we regulate part of the market and leave the rest unregulated, as happened with the mortgage market, that created, in my view, a lot of what caused the financial meltdown — that’s never going to work.”
What won’t work is an incredibly powerful new agency regulated only by the promise of its director that he’ll play nice.
