Financial Services Industry Protected From Consumers

Whew! It was a close call. The financial services industry almost got the regulator they feared the most: Elizabeth Warren as Chief of the Consumer Financial Protection Bureau (CFPB). She could have been the end of financial services as we know it and are abused by it. She wanted clear language in mortgage contracts. She wanted rules for bankers to follow to prevent them from doing themselves in again (and us). She wanted full disclosure. She wanted the kind of change candidate Obama promised in 2008. Dangerous lady. Obama picked someone else.

President Obama had intended to make Warren the permanent chief of the CFPB. Her problem was being perfectly qualified. First, she designed the new bureau and was its acting chief. Second, she steadfastly defended the CFPB against the 44 Republican senators who have vowed to derail and destroy it. She had the temerity to publicly stand up to them last month when they had their facts wrong or did not understand provisions of the Dodd-Frank bill that created CFPB. She represented a genuine attempt for adult supervision of financial services.

The Gang of 44’s price of approval is appeasement packaged as compromise. The president has chosen Richard Cordray as chief instead of Warren. Cordray may find his approval dependent upon his willingness to implement an exist-but-don’t-enforce policy (perhaps modeled after the Federal Trade Commission’s approach to Do Not Call) and, just for good measure, make the CFPB’s mission into protection of mortgage lenders from rapacious consumers.

A close call! Now the financial folks may feel a bit safer. If Cordray cooperatively compromises, the CFPB will join other agencies that have the full faith and support of the corporations they regulate. Elizabeth Warren would not have allowed it. Under the bus with her!


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