Obama pushes consumer protection bureau to completion

Bank sign on building

What got into Barack Obama yesterday?

He stood up to the banks.

It was almost an ah-ha moment when the president used a recess appointment to name Richard Cordray to head the new Consumer Financial Protection Bureau.

This is the bureau Congress created more than a year and half ago to help us avoid some of the nasty surprises the banking industry has been springing on us over the past decade.

If there was one thing we learned from the financial crisis, it's that individual consumers are no match for the banks, their lawyers and everything they can hide in impenetrable contracts.

We were sold mortgages we couldn't hope to repay, credit cards with interest rates that exploded to 30% or more and checking accounts so laden with gotcha fees that they drained our balances.

Now, the government can't keep you from doing dumb stuff.

But it can level the playing field and help all of us be better informed buyers of financial services.

Take a look at one of the bureau's first proposals, a simplified standardized credit card agreement that's just a couple of pages long -- not 25 pages long.

This is not radical stuff.

Yet the banks hate the consumer protection bureau more than anything.

They're used to being supervised by the Federal Reserve, which is more of a lapdog than a watchdog.

It was the Fed, after all, that stood idly by while the financial industry's reckless lending and speculative investments caused the worst economic crisis since the Great Depression and then rushed in with the bailout money.

And consumers? The Fed has never worried very much about how the banks treated us.

The idea that a new government agency might start telling them to play nice and help consumers spot new fees and unnecessary costs in their products has them pretty worked up.

The moment Obama nominated Cordray to run it last July, the banks mobilized their supporters on Capitol Hill -- which is to say most of the Republicans.

It's not that Cordray, a former Ohio attorney general, is unqualified.

The banks and their Republican allies said they would block the appointment of any director until they won substantial changes in the new bureau that would substantially weaken its ability to regulate them.

This was a clever ploy.

The consumer protection bureau has been hiring staff and starting work under direction of the White House ever since Obama signed the law creating it in July 2010.

But that legislation severely curtails the bureau's ability to act until a director is in place to review and approve its actions.

So, as long as the banks could stall appointment of a director, the bureau was limited in what it could do on consumers' behalf.

Fighting back against that stalling strategy is probably the boldest action Obama has taken against the banks since he was elected.

Until now, the president has been surprisingly passive and accommodating toward a combative industry that's shown no remorse for the crisis it caused and the suffering so many have endured.

I saw where the Senate's top Republican, Mitch McConnell of Kentucky, charged Obama had "arrogantly circumvented the American people" with Cordray's appointment.

I suspect many Americans see it differently.

If anyone's been arrogant over the past decade, it's been the banks. Obama acted in our best interests yesterday.

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  • Mike Cetera

    Cordray talked tough Thursday in his first post-appointment speech: "The consumer bureau will make clear that there are real consequences to breaking the law." This could be a real shot in the arm for consumers.