By Rita R. Robison
Yesterday, President Obama appointed Richard Cordray to head the new Consumer Financial Protection Bureau in a recess appointment.
After the housing market collapse due to fancy footwork by the mortgage industry and Wall Street and the ensuing Great Recession, Warren saw the need for an agency that would be a watch dog for consumers in credit card, mortgage, and payday loan transactions.
Warren served as interim director of the agency and hired Cordray to be its top enforcement officer.
Previously, consumers filed complaints with a number of different federal agencies, including those regulating different kinds of banks, with varying results.
Speaking yesterday in Ohio, where Cordray served as attorney general and state treasurer, Obama said:
When Congress refuses to act, and as a result, hurts our economy and puts our people at risk, then I have an obligation as president to do what I can without them. I’ve got an obligation to act on behalf of the American people. And I’m not going to stand by while a minority in the Senate puts party ideology ahead of the people that we were elected to serve. Not with so much at stake, not at this make-or-break moment for middle-class Americans. We’re not going to let that happen.
The Constitution gives the president authority to make temporary recess appointments to fill vacant positions when the Senate is in recess. The Senate has been in recess for weeks. But, in an attempt to prevent the president from exercising his authority, Republican Senators have tried to use “pro forma” sessions, sessions during which no Senate business is conducted and one or two Senators gavel in and out of session quickly. Legal experts agree that the Senate can’t use sham “pro forma” sessions to prevent the president from exercising a constitutional power.
Without a director, the agency was unable to regulate non-bank financial businesses including payday lenders, mortgage companies, and debt collection agencies.
Conservatives want to further weaken the bureau by having it run by a five-member commission and its budget approved by Congress rather than the Federal Reserve.
For more information on the new federal bureau, see “Consumer Financial Protection Bureau 101: Why We Need a Consumer Watchdog.”