I got into just one fight while in elementary school.
A bully was hitting my younger brother, Mitchell, who suffered from epilepsy. The attacker was considerably larger than my brother, who was cowering on the ground trying to block the punches with his arms. I was skinny and bookish and would cry if you looked at me hard. But I got between that boy and my brother and just started swinging. I fought so hard on behalf of my brother. The bully never bothered him again.
That’s how I see the Consumer Financial Protection Bureau: as a protector of consumers from the punches of bullying financial companies. And it’s what I expect from the new director, Richard Cordray. The agency, under his lead, is supposed to be the big brother (or sister) consumers need to enforce federal consumer financial protection laws and, if necessary, create rules that will head off unfair, deceptive or abusive financial practices and products.
Maybe it’s too much to hope that a federal bureaucracy can beat back the many bullies who for too long have taken advantage of consumers, even those who should know better. But we have to try. Credit products today are so complicated that someone has to step in as a watchdog.
I spoke to Cordray, the former attorney general of Ohio, about his plans for the bureau. He might have started off softly, considering the controversy over the legitimacy of his recess appointment by President Obama. Senate Republicans tried to block all efforts by Obama to appoint someone to head the agency. But, like shooing away gnats, Cordray isn’t letting the gripes about his appointment deflect from his ability to do his job.
“I’m not going to let it affect our effectiveness,” Cordray said.
True to his word, just one day after his appointment the agency announced that it was launching a nonbank supervision program. Nonbanks are companies that offer consumer financial products or services but do not have a bank, thrift or credit union charter. Nonbanks include companies such as mortgage lenders, mortgage servicers, payday lenders, consumer-reporting agencies, debt collectors and private student lenders.
“This is an important milestone,” Cordray said. “A lot of industries and firms have never had any meaningful federal oversight.”
Examiners will be looking at the nonbanks’ practices and products, focusing on what risks they pose to consumers. “We can see exactly what is going on in the institutions,” Cordray said. “We have the authority to get all the information we need, documents we need, and then take corrective action and work with the institutions. A supervision program can solve a lot of problems faster and in a more lasting way.”
After Cordray’s appointment last week, I asked readers what they thought of the agency. Overwhelmingly, the dozens of people who responded said that consumers need an identifiable protector.
“It’s about time,” wrote Suzanne Cloutier of Santa Barbara, Calif. “I hope the agency remains powerful enough to work diligently on behalf of consumers, especially those who need the most help and/or have been treated unfairly.”
Jackie Vaughn of Pawleys Island, S.C., noted: “As an American with a mortgage which is currently underwater, I truly need someone to be focused on looking out for my interests.”
And William J. Gall of Millersville, Pa., said he sees the agency as a way to shift power to consumers. “Really, both parties have been complicit in the favoring of corporate interests,” he wrote. “Our two-party system seemed to be coalescing around two similar viewpoints: Greed is good, and greed is great. Perhaps now this insatiable disposition — greed — will be tempered by an agency that will look out for the welfare of real live human beings.”
In a speech at the Brookings Institution, Cordray said that when you think of the agency and the people it will help, picture the faces of your family members. I certainly think of my brother.
“Consumers deserve to have someone who will stand on their side, who will protect them against fraud, and who will ensure they are treated fairly in the financial marketplace,” Cordray said in the speech. “Like all of us, they want to be able to use consumer credit to make their lives better, not worse. That is our goal as well. The financial marketplace can be a potent arena that helps people find and seize opportunity. It should not condemn them to bewildering failure.”
Still, some people who wrote to me expressed doubt about the agency’s ability to bring about meaningful change.
“I just hope this consumer protection agency actually lives up to its name and doesn’t become just another paper-shuffling ineffectual bureaucracy,” said Stephen A. Morris of Lincoln, Neb.
I hope so too.
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