I’m sure you’ve heard about Richard Cordray, the recess appointment by President Obama to the Consumer Financial Protection Bureau, the CFPB. Yes, I definitely have an opinion about that one!
So far, the CFPB only has the leader. Because it is a “recess appointment,” Cordray’s term goes through the end of 2013. The Senate technically isn’t in recess, but that’s another issue! There were two associate directors temporarily appointed to the board before Cordray. First it was Elizabeth Warren, who led the conception and establishment of the CFPB, and she was then replaced by Raj Date, who had started a nonprofit think tank devoted to promoting the regulation of financial firms. Now, we have Cordray.
So how many federal regulatory bureaus and boards do we really need? This seems to be a little ridiculous, creating the CFPB. I know, I know, this board is supposed to supervise and regulate non-bank financial firms, such as mortgage originators and payday lenders, but don’t we already enough bureaus and boards to do that, assuming that they would actually do their jobs?
The CFPB is tasked with the responsibility to promote fairness and transparency for mortgage, credit cards, and other consumer financial products and services. It was designed to consolidate employees and responsibilities from other regulatory boards, including the Federal Reserve, the Federal Trade Commission, the Federal Deposit Insurance Corporation and the Department of Housing and Urban Development (???), and it will be an independent unit inside and funded by the Federal Reserve. It can write and enforce bank rules, conduct bank examinations, monitor and report on markets, and collect and track consumer complaints. Don’t we already have groups who do that? If so, get rid of the other ones! Who needs duplication?
Why do we actually need this? And how far does the CFPB responsibilities go?
Not only regulatory control over retail financial products, it will design its own “standard” simple consumer financial products that will contain only Agency-approved features. Retail sellers will be required to offer these products and the Agency can actually forbid the seller to offer its own products. The Agency is supposed to design products to be read in less than 3 minutes and the seller can’t be sued by consumers who buy these Agency products. So what seller is going to offer anything BUT Agency products? Consumers will be nudged into buying whatever product the Agency designs, you watch.
So much for free enterprise! How much will mortgage companies change due to this madness? How much more will payday lenders charge those who can’t afford to pay more? And credit cards? It sounds like the federal government is taking them over also, limiting the investor’s dividends. Where does this stop? If you don’t like a non-bank financial firm, change companies! Let the system work, without more regulations … please!!!
And this is not just an abomination foisted upon taxpayers by President Obama. He may have appointed Cordray but it was Congress who passed the Consumer Financial Protection Agency Act of 2009. What were they thinking? Now, Congress has the right to defund this bureau, IF they have the guts to do so. Sadly, I don’t think they do.