On July 17, 2011, President Barack Obama announced Richard Cordray as his nominee to head the Consumer Financial Protection Bureau. When the Republicans balked at confirming him (or any other possible candidate) to head the CFPB, the administration announced his recess appointment on January 4, 2012. Almost two years to the day after his initial nomination, Cordray was finally confirmed on July 16, 2013. After all that time, he won 71 votes for cloture and 66 votes for confirmation. In other words, not only was Cordray an acceptable candidate when he was nominated, but he hasn’t done anything to damage his reputation in the two years that he has been running the organization on an interim basis. The Republicans were holding up his confirmation because they don’t want consumers to have expanded consumer protection. They have been doing the bidding of big banks, credit card and mortgage issuers, payday lenders, and people who rely on fraud and deceit to pad their quarterly profits. The way the CFPB was set up under Dodd-Frank, it’s regulatory powers were limited to pre-existing rules until they had a permanent Senate-confirmed director.
“There was never a case ever in Senate history where someone was blocked because they didn’t like the agency — not because of the nominee or his or her qualifications,” said Sen. Sherrod Brown (D-Ohio), noting Republicans have always said their problem is with the bureau not with Cordray. He charged that Republicans had been swayed by Wall Street’s opposition to the CFPB. “Government can’t operate that way.”
Ever since a ridiculously partisan panel of conservatives on the DC Circuit Court of Appeals ruled that Obama’s two recess appointments to the National Labor Relations Board (which were made the same day as Cordray) were unconstitutional, Cordray’s status and the CFPB’s rulings have been under a cloud.
Since then, the bureau has been operating amid legal questions about whether rules written to oversee mortgages and other products during Cordray’s tenure could be thrown out if a court decides his recess appointment was unconstitutional as well.
But banking lawyers said those issues are largely moot now that the Senate has confirmed Cordray.
“I think it will largely, if not entirely, remove the cloud that overhangs the bureau right now,” said Alan Kaplinsky, the head of the consumer financial services group at the Ballard Spahr law firm.
Bank lawyers expect Cordray to move quickly to ratify the rules he has issued and decisions he has made during his recess appointment, including a slew of important mortgage rules under Dodd-Frank.
This cloud has obviously affected the decision-making and priorities of the CFPB.
The bureau has been exercising all of its powers since Cordray’s recess appointment, and officials have consistently said the threat of a legal challenge has not slowed them down.
But some in the industry, including former CFPB lawyers, have said the bureau by necessity has prioritized issues that would not be affected if Cordray’s appointment was overturned.
The important point is that the CFPD can now act more rationally, and with the self-confidence that what they say today will not be overturned in some partisan court tomorrow. The issuance of rules and regulations should become more consistent and bad guys better watch out. They’ve been fairly busy as it is, but if you practice usury or fraud, Mr. Cordray is coming after you.
After the Affordable Care Act, this is the single greatest accomplishment that Obama has made for the vulnerable in our society. And it really is a big fucking deal.
Elizabeth Warren is beaming.
