In 2009, President Obama signed the Wall Street Reform and Consumer Protection Act, which, among other things, created the Consumer Financial Protection Bureau (CFPB). The powers of the Bureau were additionally a part of the Dodd-Frank financial reform legislation that made it through Congress as well. Dodd-Frank was named after its sponsors, Democratic Congressman from Massachusetts, Barney Frank, and Democratic Senator from Connecticut, Chris Dodd.
Everyone involved in creating the agency had intended to strengthen the organization to be able to protect and educate consumers. The CFPB would oversee and protect the rights of consumers when it came to banks, payday lenders, securities firms, debt collectors, and other financial businesses.
Whether consumers are taking out an unsecured line of credit or applying for a student loan, the process would fall under the scope of the CFPB. It was thought that by giving the bureau such a wide reaching jurisdiction, it would be better for consumers to have all these issues covered and regulated by one government agency rather than seven, as it had been.
After the bill passed, the Consumer Financial Protection Bureau was created very quickly. A US Senator representing Massachusetts, Elizabeth Warren, was previously President Obama's "consumer czar" and she was responsible for creating and setting up the agency.
As the organization came to completion, President Obama received a lot of pressure from Warren's supportive fan base to hire her as the agency's leader. But the President went in a different direction, appointing Ohio Attorney General Rob Cordray.
Since its inception, the CFPB has faced a lot of controversy around the question of whether the agency even had a right to exist and operate in the way it was. A lawsuit was filed against the Bureau in 2012, questioning the organization's constitutionality.
Even now, the Bureau faces its unfair share of backlash and criticism. Republican Congressman from Alaska, Spencer Bachus, is a regular and outspoken opponent of the federal agency. Congressman Bachus led the threat to block Warren should she be appointed as leader of the CFPB and then continued to block the appointment of the President's alternative appointee, Rob Cordray.
In response to the Congressman's reaction, Warren spoke out against the backlash towards the CFPB. "I see nothing here but a filibuster threat against Director Cordray as an attempt to weaken the consumer agency," she said. "I think the delay in getting him confirmed is bad for consumers, it's bad for small banks, bad for credit unions, for anyone trying to offer an honest product in an honest market." I agree!
She went on to question many congressmen's calls to redesign the leadership so that it was led by a congressional committee, not a single director. "What I want to know is why, since the 1800s, have there been agencies all over Washington with a single director, including the [Office of the Comptroller of the Currency]," she began, "but unlike the consumer agency, no one in the U.S. Senate has held up confirmation of their directors demanding that the agency be redesigned."
NEWSLETTER SIGN UP
SUBSCRIBE
CONTACT
Leave a comment