They are filibustering the appointment of Teamster friend Richard Cordray to the Consumer Financial Protection Bureau. They're also trying to take away the agency's independence -- and its teeth.
Cordray is running the agency now because President Obama made him a recess appointment. (He is also a five-time undefeated Jeopardy champion.)
Paul Krugman explains that the CFPB was a shining example of how to reform banking regulation the right way. He called it "a stand-alone agency with its own funding, charged with protecting consumers against financial fraud and abuse." Writes Krugman:
Why is consumer financial protection necessary? Because fraud and abuse happen.
Don’t say that educated and informed consumers can take care of themselves. For one thing, not all consumers are educated and informed. Edward Gramlich, the Federal Reserve official who warned in vain about the dangers of subprime, famously asked, “Why are the most risky loan products sold to the least sophisticated borrowers?” He went on, “The question answers itself — the least sophisticated borrowers are probably duped into taking these products.”
And even well-educated adults can have a hard time understanding the risks and payoffs associated with financial deals — a fact of which shady operators are all too aware. To take an area in which the bureau has already done excellent work, how many of us know what’s actually in our credit-card contracts?Here's what CFPB has done for you already: Gotten rid of misleading add-on products to credit card accounts. Big credit card companies canceled their add-ons after the CFPB dinged Discover, American Express and Capitol One $536.5 million for lying about things like identity theft protection.
And three weeks ago, the agency announced new rules protecting mortgage borrowers from unscrupulous lenders. The rules prohibit mortgage brokers from selling risky loans to unsuspecting borrowers.
Two-thirds of Americans agreed the agency is necessary. Nine out of 10 Americans support requirements that clear explanations of rates, terms and fees be required of banks, lenders and credit card companies. Eighty four percent of small businesses support the CFPB.
