The showdown between consumers and Wall Street

By David Rosenfeld of Portland, Oregon. David is the Executive Director of OSPIRG.

This Thursday, July 21, the landmark Consumer Financial Protection Bureau (CFPB) takes over as the nation’s chief consumer bank regulator – it will supervise mortgages, credit cards and other bank loans, including overdraft fees. The agency has potential to protect consumers against big banks in important areas where the Oregon Legislature have failed, and expand protections in areas where state lawmakers have succeeded.

Unfortunately, because no director has been confirmed, the Bureau will not have its full authority to protect consumers in the financial marketplace including oversight of mortgage companies and credit bureaus. Without a director, America’s newest consumer cops won’t have the political presence and clout needed in regulatory battles with Congress, other bank regulators and the banks themselves.

But the time of reckoning is near. This week, the President announced his intention to nominate former Ohio Attorney General Richard Cordray, the current enforcement chief at the Bureau, as the CFPB’s first director. He has a well-balanced record as an attorney general who worked to protect the people of Ohio. In the last two years, he recovered over $2 billion dollars from Wall Street to repay Ohio’s wrongly-foreclosed consumers, the state’s looted pension funds, and its cities and counties that lost money once guaranteed by Wall Street.

Many people will be disappointed that the President didn’t nominate Professor Elizabeth Warren for the post. Warren gets the credit for creating and pushing the idea of a consumer watchdog and is a highly-respected academic expert and popular author on consumer finance. Several months ago, she was hired by the President to set up the agency, and worked tirelessly to hire and manage a variety of staff – selected from business, other agencies, academia and consumer groups (some hires listed here).

As much as we would have loved to see Ms. Warren nominated, AG Cordray is more than qualified to protect American consumers as the first director of the CFPB.

However, his confirmation by the Senate is not guaranteed. Early this year, 44 Republican Senators wrote the President that they would confirm no nominee, not Elizabeth Warren or anyone else, unless the bureau’s powers were first gutted.

Bring it on. Wall Street has many Senators willing to do their bidding, true. But Americans from across the political spectrum have little patience left for the big banks. Pro-consumer Senators, including our very own Sens. Merkley and Wyden, should use the confirmation process as a way to publicly force every Senator to chose a side – Wall Street mega-banks, or the rest of us.

And if that effort fails, then the President should use his authority to appoint a director in August.

Regardless, this is a fight where the sides are clear – and the stakes for ordinary people huge.