The Consumer Financial Protection Bureau officially opens its doors today. Conceived in the wake of the subprime meltdown and the subsequent financial market crash, the CFPB was envisioned as a financial services version of something like the Consumer Product Safety Commission, except that instead of pulling lead-tainted toys or dangerous cribs off the market, it’ll be cracking down on things like predatory loans and misleading mortgage contracts.
Harvard professor Elizabeth Warren has been overseeing the formation of the CFPB, but some in Congress object to having her run it. (There’s also a faction of 44 Republican lawmakers who say they’ll refuse to approve any director for the new agency.) Earlier this week, the Obama administration surprised many people when it passed over Warren and nominated Richard Cordray, the former attorney general of Ohio, for the top spot.
Warren had indicated she planned to make consumer credit and debit card issues an early focus; Cordray, meanwhile, grabbed the limelight because of his pursuit of banks that committed foreclosure fraud. However, consumer advocates don’t think it’s likely that Cordray will pay any less attention to card-related issues, even given his earlier focus on mortgage abuses.
“Warren had a long history on credit cards and credit card reform and was deeply committed to it, but I wouldn’t expect that the agency’s priorities under Cordray’s leadership would be different,” says Travis Plunkett, legislative director for the Consumer Federation of America. “They’ve identified a number of consumer banking issues as top priorities.”
Ed Mierzwinski, consumer advocate at U.S. PIRG, also says he thinks credit and debit issues will remain a top priority. “Two of the biggest issues for big banks are whether they comply with the new Credit CARD Act and their use of debit card overdraft programs,” he says via email. “I expect the CFPB to look at both of these issues early.”
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Another reason the CFPB is likely to keep its focus on credit cards is that, for now at least, Elizabeth Warren is still at the helm, says Plunkett, so she’ll oversee day-to-day operations for the time being. When or even if Cordray will be approved is an open question; perhaps not surprisingly, the banking industry despises him, and it wields considerable influence with lawmakers through its lobbyists.
But even without that approval, the bureau has plenty to keep it busy right now. Cordray is currently its chief enforcement officer, so it’s not like he’ll be warming the bench. According to the Treasury and Federal Reserve Board, the CFPB won’t be able to make any new rules right now, but it can enforce compliance with existing rules. The CFPB is also setting up a complaint center, “with an emphasis on credit cards to start,” according to Mierzwinski.