What The Cordray Confirmation Means For Credit Unions

July 23, 2013 at 8:18 am Leave a comment

If you had bet me a week ago as I was headed out on vacation that when I posted my next blog Richard Cordray would  be confirmed  by the Senate as the first head of the CFPB, I would have assumed you were out in the sun too long and gladly used my expectant winnings to bet against Phil Mickelson winning the British Open.   Oh well.  So please allow me to be a few days late in drawing lessons from the Senate’s sudden change of sentiment and explain why I wish they could have both confirmed Cordray and limited his power.

First, even though this was all about the Republican’s blinking in the face of Democratic threats to alter the filibuster rules (reform that will come sooner or later), the fact that 66 Senators voted for him is a testament to the decency and professionalism with which Cordray specifically and, by extension, the Bureau as a whole has conducted itself.  In an era when publicly vilifying your opponents is a résumé builder in Washington, politicians have always gone out of their way to say they like the director.  It’s the Bureau they hate.

I know regulations are boring, burdensome and overly intrusive; but they are also vitally important.  So it is refreshing that the Bureau staff actually reads comment letters and incorporates changes that it views as appropriate into final regulations.  In addition, it actually tries to write regulations in a way that can be understood without an advanced degree in bureaucratic jargon.

Furthermore, the Director is one of those increasingly rare public servants who actually is a public servant.  On paper, the Bureau was created to be an advocate for the consumer and it has actually followed through on its mandate as opposed to paying it lip service.  And one more thing:  there is no other government entity that not only talks about credit unions but actively seeks to protect them.

So why am I disappointed that the Republicans weren’t able to wrangle at least some reform of the CFPB in return for a permanent director?  Because as I have said before, the Bureau exercises too much power to be subject to so little oversight.  Call me a lackey for the man, but no single individual should be able to fundamentally change every financial product in the country with no effective checks on his or her power.

Also, this is no time to be thinking up additional changes but the CFPB now has a green light and a window lasting until the President leaves office to, for example,  fundamentally change Regulation Z,  Overdraft protections and payday lending while continuing to tinker with mortgage regulations.  The problem is that these are all areas that have been addressed in recent years but by the time the CFPB is done many of our existing disclosures will be suitable for wall paper.

It’s time to slow down the regulatory burden but with its green light from Congress and the backing of consumer zealots, the CFPB will conclude that there is no time to waste in protecting the American Consumer from itself.




Entry filed under: Regulatory. Tags: .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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