When an appeals court ruled that President Obama’s recess appointments of members of the National Labor Relations Board was unconstitutional, it also threw into doubt the validity of the recess appointment last January of Richard Cordray, director of the Consumer Financial Protection Bureau. There was already a clash shaping up over Cordray’s reappointment; Obama nominated him Thursday, and Senate Republicans vowed to block the nomination, setting up the same stalemate that led to last year’s recess appointment in the first place.
The CFPB has had a turbulent childhood, so to speak, since it began operations in July 2011 (for one thing, it operated without a director for six months). Last week’s NLRB court decision sets a legal precedent, but it won’t affect the CFPB’s day-to-day operations, at least not in the near future. “Going forward, we will continue our essential work to protect American consumers,” a spokesperson says.
The White House can — and probably will — appeal this decision to the Supreme Court, but the CFPB still faces resistance. It’s not Cordray himself, a former Ohio attorney general who was aggressive in pursuing mortgage robo-signing fraud, that Congressional Republicans have a problem with. They want to have the bureau overseen by a committee, which supporters of the current structure say would give the industry too much of a chance to exert its influence and water down the rules meant to regulate it.
For what it’s worth, even some in financial services have come around to Cordray over the year he’s been at the helm of the CFPB. Richard Hunt, president and CEO of the Consumer Bankers Association, told The Hill. “As chair of a commission, he would be a worthwhile, credible candidate.”
“Our mission is to stand on the side of consumers… and see that they’re treated fairly,” Cordray said in a statement last week. So, how’s that working out?
For the average bank accountholder, credit card user, borrower — you know, pretty much all of us — the CFPB has done a lot in its short tenure to implement protections from fine print, legalese and even deception used to separate us from our dollars. In 2012, its actions led to $425 million being refunded to some 6 million consumers — mainly over shady marketing tricks that got people to sign up for services they didn’t need, want or sometimes even understand.
Given Cordray’s long history of fighting abuse in the mortgage industry, it’s not surprising that mortgages were the first area where the agency started drawing up new regulations. Last week, it finalized a list of mortgage rules intended to make the process more transparent and standardized. Oh, and those “no doc” loans that were all the rage right before the real estate market imploded? They’re off the table, as are interest-only loans with monthly payments that skyrocket after an initial teaser period expires.
The CFPB also takes gripes. Over the past year and a half, it has fielded more than 133,000 complaints about credit cards, mortgages, student loans and other financial products and services. Last June, it opened up a public credit card complaint database, so people can see how many ticked-off customers a particular issuer has — and how many of their complaints are eventually resolved.
But wait, there’s more: Since the CFPB’s authority extends to financial companies that aren’t banks, it’s also delved into issues with student loans, prepaid debit cards, debt collection and credit reporting — all areas that were in a sort of legal no-man’s-land before the CFPB came along. The FTC can investigate complaints and go after lawbreakers, but people have to get ripped off first — it can’t proactively check up on a company to make sure it’s following the rules. The CFPB can.
Ultimately, much of how and how effectively the CFPB operates will be decided in a courtroom somewhere. But for the ordinary people who have been able to get a dispute resolved or a refund they deserve, it’s a safe assumption that the agency has established its credibility already.