GOP leaders fumed when President Obama appointed Ohio’s former Attorney General to head the new Consumer Financial Protection Bureau (CFPB) without Senate confirmation. The president announced Cordray’s appointment during his visit to Shaker Heights last week.
“Today I’m appointing Richard as America’s consumer watchdog," began Mr. Obama, before a cheering crowd at Shaker Heights High School. "And that means he’ll be in charge of one thing: looking out for the best interests of American consumers……looking out, for you."
The president billed the January 4th move as a recess appointment – a common occurrence when the Senate is not in session. Republicans had held a series of “pro forma” sessions – gaveled in for just a few minutes every three days to keep the Senate technically open for business, and block any recess appointments. But Mr. Obama went ahead with Cordray’s anyway -- plus three others -- claiming the pro-forma sessions were a sham.
GOP leaders decry the move as an unprecedented “power grab” and have warned that it may be challenged in court.
Despite the controversy, Cordray is forging ahead. Speaking on 90.3’s "The Sound of Ideas" program, he told host Mike McIntyre he’ll work with both Republicans and Democrats, to help their constituents with credit card debt, student loans, and home foreclosures. He says his bureau will help level the playing field between banks and non-banks, and make sure consumers aren’t victimized by shifty financial practices.
“You’re not going to have mortgage brokers undercutting other mortgage lenders, where they falsify the income of the borrower…or they give you weird interest rates that are going to jump up like a credit card rate, in 6 months’ time," said Cordray. "The kind of things that really undermine the market, and made it break down ultimately into the financial crisis of 2008.”
Most critics of the appointment say they have no particular objection to Cordray; it’s the bureau they don’t like. They say it has too much power and too little accountability. One "Sound of Ideas" listener said he thought an agency like the CFPB could amount to a “tyrannical” operation. Cordray says those fears are overblown.
“We have some authority to try to get the credit card companies to treat their customers more fairly, we have some authority to get the mortgage lenders to treat their customers more fairly," said Cordray. "The notion that in a marketplace where there’s been very little authority ever exercised on behalf of consumers – and I know how I struggled as Ohio Attorney General to try to address some of the problems that people were bringing to me, that were really upsetting their lives -- I think it’s a great thing we have consumer financial watchdog to make a dent in these problems.”
Cordray’s appointment lasts two years. Critics are still considering whether a court challenge would succeed, and if it did, whether it would work in their favor politically. The issue could figure prominently in the presidential campaign, especially once Republicans choose their nominee to run against President Obama.