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The Partisan Fight Over Consumer Protection


Back in Washington, D.C., another partisan fight between Republicans and Democrats, this time over the Consumer Financial Protection Bureau. This week, the Senate blocked the confirmation of Richard Cordray, the former Ohio attorney general who was President Obama's choice to lead the agency. Republicans say the bureau has too much power and too little accountability. Democrats say they don't want to weaken an agency that's meant to protect consumers. The Consumer Protection Bureau is a key element of legislation enacted last year to overhaul the financial system, but under law the agency cannot fully function until a director is in place. Joe Nocera's back with us; op-ed columnist for the New York Times. Joe, thanks so much for being with us.

JOE NOCERA: Thanks for having me, Scott.

SIMON: And Senate Majority Leader Harry Reid says this is the first time in the history of the Senate that a party has blocked a candidate not because they disapprove of the candidate's credentials; they don't like the agency. Now, help us understand the Republican argument here.

NOCERA: Well, the Republicans have never liked the agency, of course, but it was passed as part of the Dodd-Frank bill before the Republicans were able to take control of the House of Representatives. So what has been happening? Ever since that event is - there has been enormous pushback against this agency. You'll recall that Elizabeth Warren was treated more or less like a pinata during the time she was in charge of the agency. She was never nominated to direct it because they knew they couldn't get it through. And now, the same thing is happening with Mr. Cordray. What the Republicans say is, budget is embedded inside the Fed; therefore, there's not budgetary oversight. They say it shouldn't have a director; it should have a five-person commission, like the SEC. There's a bunch of things like that. The bottom line is, they don't like the agency and this is their way of expressing that.

SIMON: Does the fact that the agency hasn't had a director, really, since it's opened in July mean it's not doing anything?

NOCERA: It actually is doing quite a bit, but there are limits to what it can do. It's already trying to come out with clearer mortgage statements, clearer credit card statements; just doing things that will simplify things for consumers and make the choices that they have to make in financial matters clearer. That, it's allowed to do. But here's the great irony, Scott. Until it has a director, it cannot extend those powers to non-banks. So payday lenders stay unregulated; mortgage originators stay unregulated. All the institutions that helped bring about the crisis are still off-limits to the consumer agency, and the only thing it can actually regulate are banks.

SIMON: Joe, almost every Republican senator has signed a letter saying they are going to oppose any nominee until changes are made. Does that leave any room for compromise?

NOCERA: Certainly not until the elections, Scott. This will be a director-less agency for the foreseeable future. The Democrats are right in saying that it is highly unusual for the other party to use the nomination process to try and change an agency that has already been legislated into existence. My guess is, however, this may not be the last time we see this.

SIMON: Do the Republicans have a point when they make certain suggestions for how the agency might be more effective?

NOCERA: It's really hard to know whether the agency would be more effective if it had a commission verses a director. There are some agencies in government that have directors; some that have five-member commissions. What is certainly true is that its budget is currently protected in the way that it is organized. And if it were given a typical oversight, its budget probably would be getting cut, just like all the other banking agencies are getting cut. So, one of the reasons Democrats are so adamant about having its budget inside the Federal Reserve is precisely to protect against that.

SIMON: Joe, nice talking to you again.

NOCERA: Always, Scott.

SIMON: Joe Nocera, op-ed columnist for the New York Times. Transcript provided by NPR, Copyright NPR.

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