Don't deter new consumer agency
President Barack Obama and Richard Cordray, his nominee to become director of the Consumer Financial Protection Bureau (July 18, 2011) Credit: AP
The Consumer Financial Protection Bureau, created in the aftermath of the financial crisis, opens for business today without a director and with its power and independence under attack. It's a rocky launch for an important reform.
A federal bureau dedicated to ensuring consumers aren't misled in financial transactions and that banks play by the rules deserves better. So do consumers.
President Barack Obama nominated a director Monday. He's Richard Cordray, a former Ohio attorney general. That disappointed some Democrats and consumer groups who preferred Harvard professor Elizabeth Warren, who conceived the bureau and set it up. Strong opposition from bankers and Republicans made it unlikely she could be confirmed. Cordray is a strong plan "B."
But 44 Republican senators have told Obama they won't confirm anyone unless the bureau is restructured. Their notion of restructuring would hobble the bureau -- replacing the director with a board of five political appointees, for instance, and allowing other regulators of the financial industry to veto bureau rules that might hurt company profits.
Without a confirmed director, the bureau can supervise compliance with existing laws, but can't write new rules or extend its reach to companies such as payday lenders and debt collectors.
Obama and supportive senators should fight for a muscular regulator whose mission is to look out for consumers.
