Here’s what you need to know about Consumer Financial Protection Bureau director Richard Cordray’s speech at the Brookings Institute today:
He’s ready to go now.
And if you’re wondering what he thinks about the controversy surrounding his position, he has no doubts: “The appointment is valid. I am now director of the bureau, he said calmly.” No. He does not expect significant legal challenges.
“The stakes are high,” he told the crowd of journalists and industry observers at Brookings. Credit follows consumers everywhere they go, so prices and risks need to be clear. That requires regulation and oversight, and so it makes sense that he said most of the “problems (of the financial crises) were created by non-bank institutions without regulation.”
The CFPB, up and running but headless since July, has been collecting stories from Americans across the country — stories about bad credit, twisted mortgage agreements, and confusing deals with financial institutions.
After examining them all, there’s really one giant base to everything Cordray aims to do in his office. He wants to completely change the way Americans communicate with financial institutions.
We’re not just talking about increasing transparency here. Cordray has started a “Know Before You Owe” campaign that helps consumer understand the language in credit card agreements. In his words — he wants to put things like this “in English…I believe financial institutions can speak more simply and clearly,” he said. That means changing the language of deals and eliminating fine print.
And when institutions don’t or won’t change, the CFPB has “examiners” on the ground to review loan documents, and a direct line to informants and whistle blowers. The agency, said Cordray, is ready to launch their own investigations when necessary.
And from Business Insider’s discussion with Dykema financial services attorney Donald Lampe, Americans should expect to see a lot of those investigations.
“This is a prosecutoral agency,” Lampe explained. “It’s the first time a federal agency has had the authority over all facets of the financial services industry… The question now, is how they will exercise their vast array of powers.”
Yes, the CFPB’s powers technically stretch back to the summer of 2011, but it really remains to be seen how far back they can reach in their prosecution of current malfeasance. As for going after individual executives in institutions, as Cordray has done in the past, “the burdens of proof are high,” said Lampe. But that doesn’t make it impossible.
Hold the phone, though. Cordray may be confident that his post is secure — actually he said he would leave that for others to deal with as he began his position at the CFPB — but Lampe said the appointment still could face challenges.
While politicians may not want to sully their reputations fighting against an agency built to protect consumers, the Chamber of Commerce, for one, may be willing to do it. Individual companies may be willing to as well. According to Lampe, institutions that the CFPB goes after may challenge its enforcement action by saying the agency doesn’t have a legitimate director.
Then we could really have a fight on our hands.