Just hours ago, President Obama took the bold political step of using a recess appointment to name Richard Cordray as the Director of the Consumer Financial Protection Bureau (CFPB), effective through the end of the U.S. Senate’s next full session (i.e., year end 2013). The official announcement was made this afternoon at a campaign-style event in Cleveland, Ohio, a key presidential battleground state. Cordray’s appointment comes over significant objections from both House and Senate Republicans to the governance structure of the bureau. While not objecting to Cordray’s qualifications per se, Republican leaders had been using procedural measures (pro forma sessions) to prevent a recess appointment absent structural changes. Today’s action promises to further exacerbate the political tensions between Democrats and Republicans.
Unless Cordray’s appointment is ultimately found to be unlawful and an injunction issued against the CFPB’s exercise of its new powers, the Bureau will now be able to implement its full range of authority under the Dodd-Frank Act, including the ability to regulate non-bank financial institutions and to issue rules dealing with unfair, deceptive, and abusive acts and practices. Without a Director, the CFPB was limited to using those powers inherited from existing banking regulators. While MBA supports the goal of stronger consumer protection through a unified regulator, a fully empowered CFPB presents a number of new challenges for our industry.
You should be aware that, despite the politics involved, MBA has taken steps to establish a positive working relationship with the CFPB’s leadership, including my own personal outreach to Mr. Cordray. We will continue our efforts – including direct MBA member engagement — to help ensure that the CFPB understands issues important to our industry and crafts appropriate policies.
At the same time, MBA continues to support the need for important structural changes to the CFPB, namely that the Director’s position be replaced by a five-person Commission, that the CFBP be subject to the normal congressional appropriations process, that CFPB rules be subject to review by the Office of Management and Budget (OMB), and that votes to overturn CFPB decisions by the Financial Stability Oversight Council (FSOC) take a simple majority rather than a 2/3 vote. In short, the CFPB’s influence on the financial services sector will be unprecedented, and MBA will continue to urge that appropriate institutional checks and balances be in place to ensure that the CFPB’s authority is used wisely and judiciously.
More than ever, I believe it is critical that any new regulatory policies impacting mortgage finance are sound and well-reasoned. MBA will be working with our members and other industry and consumer groups to make sure our voice continues to be heard in the coming CFPB policy debates.
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Investing in communities
David H. Stevens
President and Chief Executive Officer
Mortgage Bankers Association
1717 Rhode Island Avenue, N.W., Suite 400
Washington, DC 20036
Phone: (202) 557-2701
Fax: (202) 289-3943