Un-Warrented: American Consumers Lose Their Biggest Defender

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Last time I checked, Republicans are consumers, too. So are their families. So are their constituents. Are they truly content to stand idly by, indeed, willing to perpetuate an environment that allows their own people, as well as legitimate members of the business community, to get ripped off? (And if you doubt that consumers really do want to be better protected, take a look at this just released poll from the Center for Responsible Lending.) In any event, as I've said before, unless the agency is defanged, ideologically mangled, or financially suffocated, the Biz Boys Club and their Congressional retainers will do whatever is necessary to snuff out what several politicians have hyperbolically referred to as the "most powerful agency ever."

The good news is that the Bureau is and will be, despite all of the efforts to render it headless, strangle its funding, and limit its powers. However, unless and until there is a director, it can only embark on a more modest mission to enforce laws transferred from several other federal agencies when it comes to the biggest institutions, but its activities are more muted when it comes to non-banking financial and credit institutions—such as payday lenders, mortgage brokers, debt collectors, credit reporting agencies and the like.

And so, the prosecutor has now become the King whilst the rightful ruler has been dispatched to the ivory tower and the rules of engagement are somewhat murky and limited.

[Related article: What the CFPB Should Do About Debt Collectors]

My problem is that, while enforcement is a critical part of the bureau's legislative mandate, I have always believed that two equally important missions of the CFPB involve financial literacy education for consumers and its role as a policymaker and advocate for middle class families. Professor Warren's skills and credentials in these areas are above reproach. She has been an educator for most of her life and perhaps her greatest strength is policymaking in the consumer protection space. By contrast, Mr. Cordray has little background in either of these areas. Though I have no doubt he is a quick study.

Mr. Cordray's considerable success as the Ohio Attorney General was earned primarily on behalf of large institutions rather than individual consumers. For example, in pursuing Bank of America for misleading statements and lack of disclosure regarding the condition of Merrill Lynch during the acquisition of the failing brokerage giant, the primary beneficiaries of Cordray's laudable success were largely Merrill's bondholders, the vast majority of whom probably weren't teachers, firefighters or taxi drivers. That said, Cordray was the very first state Attorney General to sue a bank for robo-signing, which puts him way ahead of the curve in my book.

[Related articles: Credit.com's coverage of the robo-signing scandal]

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