Holly Petraeus will lead Consumer Financial Protection Bureau's Office for Service Member Affairs
Tuesday, January 4, 2011; 9:12 PM
In an ongoing push to fill key positions within the new Consumer Financial Protection Bureau, presidential adviser Elizabeth Warren plans to name Holly Petraeus to head up the agency's efforts to protect military families from abusive lenders, according to sources familiar with the move.
The appointment of Petraeus - the wife of Gen. David H. Petraeus, the top U.S. commander in Afghanistan - to lead the bureau's Office for Service Member Affairs is expected to take place later this week, said the sources, who spoke on condition of anonymity because no formal announcement had been made.
Holly Petraeus, a military wife for more than three decades and the daughter of a career Army officer, currently serves as director of BBB Military Line, a program that works alongside the Defense Department to advocate for military families and educate them on consumer issues. In addition, she has testified before Congress about military readiness and worked with state and local officials on issues affecting service members.
The office Petraeus will head grew out of a vehement political battle last year over whether the nation's auto dealers should be subject to regulation by the new consumer bureau. The dealers argued that regulators already had power to crack down on predatory practices and that additional rules merely would overburden Main Street businesses.
Military officials disagreed, recounting stories of soldiers baited into abusive loans and arguing that tight oversight of auto dealers amounted to a crucial military readiness issue. Petraeus joined that effort, arguing that extra consumer protections were necessary because dealerships often employ high-pressure tactics to trap military families into expensive loans.
"Military personnel are very attractive to lenders because they have a guaranteed paycheck. They can arrange for an allotment direct from that paycheck. And the military is a culture that strongly encourages them to pay their bills," she said in a conference call with reporters last May. "Many military car buyers are also young and inexperienced consumers. They don't recognize a bad deal when they see it. . . . And through lack of experience, they're signing on the dotted line when they shouldn't."
Ultimately, those arguments fell short, and most auto dealers won exemption from the new watchdog's oversight. But lawmakers included the creation of the service member affairs office in the final bill.
Daily schedules for Warren released last fall show that she met with Petraeus for 30 minutes on the afternoon of Oct. 12.
Petraeus will join a growing organizational chart that Warren and her team have constructed from scratch and begun to fill aggressively in recent months. For instance, the service member affairs office falls under an Education and Engagement division that includes separate efforts to safeguard older Americans, students and other vulnerable populations from abusive lending practices.
Among other hires, Warren recently recruited outgoing Ohio Attorney General Richard Cordray to lead the bureau's enforcement division. More than 100 people now work at the fledgling bureau, with many more expected to join it in the months ahead.
Still, while Warren and other officials have begun to a wide-ranging search for a full-time director for the new watchdog, President Obama has yet to nominate anyone for that post, and the CFPB cannot exercise its full regulatory powers until a permanent leader is in place. Any nominee for the position must be approved by the Senate, where Republicans strongly opposed the creation of the bureau last year.
On Tuesday morning, the CFPB's implementation team signed a "memorandum of understanding" with the Conference of State Bank Supervisors to coordinate and share information of supervision of providers of consumer financial products and services. The agreement is the first step in synchronizing and standardizing supervision throughout the states, particularly of non-bank firm such as mortgage servicers, private student lenders and payday lenders.
The Treasury Department said the agreement will allow federal and state officials to coordinate efforts to enforce applicable laws to protect consumers of mortgages, credit cards and other products.