Republican senators start attack on US consumer financial watchdog

Republicans lawmakers are starting to put in motion plans to destroy or defang the U.S. agency intended to protect individuals from financial fraud.

On Tuesday, two Texas Republicans, Senator Ted Cruz and Representative John Ratcliffe, introduced a one-page bill to kill the Consumer Financial Protection Bureau entirely.

Friends of Fraud

Like many advocates of financial reform, I was a bit disappointed in the bill that finally emerged. Dodd-Frank gave regulators the power to rein in many financial excesses; but it was and is less clear that future regulators will use that power. As history shows, the financial industry’s wealth and influence can all too easily turn those who are supposed to serve as watchdogs into lap dogs instead.

 There was, however, one piece of the reform that was a shining example of how to do it right: the creation of a Consumer Financial Protection Bureau, a stand-alone agency with its own funding, charged with protecting consumers against financial fraud and abuse. And sure enough, Senate Republicans are going all out in an attempt to kill that bureau.

A Big Week for the New Consumer Agency

This is a big week for the Consumer Financial Protection Bureau (CFPB). Today, the President will announce his intent to nominate Richard Cordray to serve as the first Director of the Consumer Financial Protection Bureau. On Thursday, the CFPB makes its transition from a start-up to a real, live agency with the authority to write rules and to supervise the activities of America's largest banks.

Rich will be a strong leader for this agency. He has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as Attorney General of Ohio, and throughout his career. He was one of the first senior executives I recruited for the agency, and his hard work and deep commitment make it clear he can make many important contributions in leading it. Rich is smart, he is tough, and he will make a stellar Director. I am very pleased for him and very pleased for the CFPB.

The DNA of the new consumer agency is well established. Our mission is clear: No one should be tricked in any financial transaction. Prices and risks should be clear. People should be able to make apples-to-apples comparisons. Fine print should be mowed down, not used to hide nasty surprises. And, everyone -- even trillion dollar banks -- should follow the law.

Elizabeth Warren for US Senate

President Obama was never going to appoint Elizabeth Warren to head the Consumer Financial Protection Bureau that the Harvard professor conceptualized and created.

Wall Street speculators, big bankers and all the other insiders who make money by gaming the system—rather than innovating, creating or contributing anything of value to the economy or the nation—objected to being regulated by someone who would use not just the the rules but the bully pulpit to hold the robber barons to account.

So Obama went with a safer choice: former Ohio Attorney General Richard Cordray. The head of the CFPB’s enforcement division, Cordray was hired by Warren and is a capable and honest player—so honest that he is all but certain to face a confirmation fight of his own before he can take charge of the new agency, which will be up and running on July 21.