New Consumer Agency Takes Over Thursday as Nation’s Consumer Bank Cop

Industry Mounts Opposition to Bureau and Any Nominated Director

Baltimore, MD—Leading consumer groups, today announced the results of a poll showing that an overwhelming majority of likely voters both support a new consumer agency (74%) and want Wall Street held “accountable” (77%), along with a report documenting “10 reasons” consumers need the new Consumer Financial Protection Bureau.  The Bureau will take over enforcement of all major consumer laws on Thursday, July 21. Maryland PIRG and the Maryland Consumer Rights Coalition called for the Senate to vote to confirm former Ohio Attorney General Rich Cordray as its director, so that the CFPB is able to fulfill the promise of consumer financial protection.

This week the President nominated Rich Cordray as the CFPB’s first director.  But leading consumer groups warn that on Capitol Hill the CFPB continued to face fierce political opposition as “powerful Wall Street banks” opposed the bureau and vowed to block the confirmation of any director.

“The good news is that this week, there’s a new police department to protect consumers from predatory lending and financial tricks and traps,” said Jenny Levin, a consumer advocate with Maryland PIRG. “The bad news is that Wall Street banks have asked their friends in Congress to defund and defang the bureau by denying it a director.” 

With the coming July 21st ‘transfer date’, the groups released a new poll of 800 likely voters prepared for Americans for Financial Reform, AARP and the Center for Responsible Lending. Among its highlights:

  • Nearly three-quarters (74%) of all likely voters support a “single agency with the single mission of protecting consumers” from unfair financial practices.
  • Three-quarters of all likely voters (77%) want Wall Street held “accountable.” Support is diverse as the results included over two-thirds of Republicans (70%).
  • Two out of three likely voters (66%), including nearly half of Republicans (49%), agreed that “We cannot get our economy back on track without strong financial reform.” Less than one-quarter (23%) agreed with the statement “The so-called Wall Street reform law is a job killer.”

The groups also released a new report, “10 Reasons We Need the Consumer Financial Protection Bureau Now.” Among its findings:

  • The report documents that while the failure of federal regulators to prevent predatory mortgage lending is well known, it is less well-known that federal regulators also failed to stop unfair credit card tricks, overdraft fee schemes and the growth of triple-digit APR and payday loans, which are now imposing a crushing financial burden on many families.
  • The report’s documents that these failures lead to the conclusion that consumer protection should be housed in one agency with just one job, protecting consumers from unsafe financial products, no matter where they buy them, at banks, payday lenders or other firms.

“The CFPB is vital to the protection of every Maryland consumer and, as we’ve learned all too well, for the safeguarding of our nation’s economy,” said Maryland Attorney General Douglas F. Gansler.  “Abusive and reckless lending practices led to a double-dose of economic despair; record foreclosures and the worst economy since the Great Depression. I support President Obama’s call to keep the CFPB strong and the tremendous consumer advocate he’s chosen to lead it, former Ohio Attorney General Richard Cordray.”

Maryland Consumer Rights Coalition Executive Director Marceline White stated, “It is abundantly clear that while poorly regulated markets may work for Wall Street, they do not work for the majority of Maryland families. We need the Consumer Financial Protection Bureau so that there will be an agency looking out for us that helps Maryland families protect their hard-earned assets instead of losing them to peddlers of dangerous financial products that were designed to deceive consumers.”

However, 44 Senate opponents of the CFPB, led by Majority Leader Mitch McConnell (KY) and Richard Shelby (AL), have sent the president a letter threatening to block “any” nominee to head the bureau unless its powers are rolled back and its funding weakened – in spite of Richard Cordray’s qualifications as a ‘tough sheriff’.  In two years as Ohio Attorney General he recovered over $2 billion dollars wrongly looted by Wall Street firms and returned it to Ohio families, retirees and municipalities.

Legislation is expected on the House floor as early as this week to roll back the CFPB.  HR 1315, the so-called “Consumer Financial Protection Safety and Soundness Improvement Act of 2011,’’ championed by House Financial Services Committee chair Spencer Bachus (AL), would gut the CFPB’s authority and eliminate its director, replacing the position with a politicized 5-member commission.

“Without a director, the CFPB won’t have the clout it needs to protect consumers and the Wall Street banks win,” Levin concluded. “So while we celebrate the new consumer bureau, we also warn that the Wall Street banks that caused the economic collapse oppose the consumer bureau, oppose the President’s nominee and want to go back to business as usual. That’s what got us into this mess and why we need to keep fighting back.”