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Romney will put business before consumers
Though presidents are rarely judged by their role in protecting consumers, President Obama may have done more for consumers than any president in recent decades. That makes sense, given that he took office shortly after the biggest economic collapse since the Great Depression, a collapse caused in part by predatory lending, consumers not understanding what they were pledging to pay, and lenders granting mortgages without verifying that borrowers' incomes could cover their payments. In response, the president led the battle to create the Consumer Financial Protection Bureau (CFPB), passed new credit card protections in the 2009 Credit CARD Act, and, in the 2010 Dodd-Frank Act, blocked lenders from granting mortgages to borrowers who cannot repay their loans. When Senate Republicans vowed to prevent anyone from leading the CFPB unless the Bureau was significantly weakened, President Obama defied them by granting former Ohio Attorney General Richard Cordray a recess appointment to head the CFPB, so the Bureau could get on with protecting consumers.
How would a President Romney compare? As governor, he signed into law Massachusetts's anti-predatory lending law--one of the laws the OCC declared didn't cover national banks. But maybe the Governor Romney who approved the predatory lending law slumbers quietly somewhere with the pro-choice Governor Romney who supported the Massachusetts health care law, feared global warming, and took many other positions at odds with his current stances. The current Mitt Romney has labeled the CFPB "perhaps the most powerful and unaccountable bureaucracy in the history of our nation" (evidently he's never heard of the Defense Department) and has called for repeal of the Dodd-Frank Act which created it. One of his economic advisors, Columbia Business School Dean Glenn Hubbard, predicted that a President Romney would seek either to move the Bureau "outside of the Federal Reserve or break up the new agency and place[its] powers within existing financial regulators." The problem with that latter proposal, however, is that it is the same system we had before creation of the CFPB--which resulted in regulators paying too little attention to consumer protection, as opposed to the interests of the banks (remember John Dugan of the OCC)--which contributed, of course, to the financial crisis of 2008. It may be revealing that Mr. Dugan (along with American Bankers Association senior officers) hosted a fund-raiser for the governor.
Governor Romney was also unhappy with the appointment of Director Cordray, which he attacked as "Chicago-style politics at its worst." The governor accused the president of creating "more Washington gridlock" with the appointment. Never mind that the appointment ended one Washington gridlock by enabling the Bureau to move forward with its consumer protection mission.
The president and governor also disagree about the Credit CARD Act, which requires credit card issuers to notify consumers 45 days before raising rates and bars unreasonable and disproportionate late fees, among other things. Governor Romney has charged that the statute led to "higher interest rates, higher annual fees, and lower credit limits. . . ." Bankers usually claim consumer credit laws will restrict access to credit and make it more expensive, and the Credit CARD Act was no exception. Yet a 2011 study by the Center for Responsible Lending found that the Credit CARD Act did not increase the cost of credit cards or make them less available.
Though consumers may not give President Obama a grade of 100% on consumer issues--his programs to help consumers facing foreclosure have disappointed some--at least he has such programs. Governor Romney, by contrast, has suggested "don't try and stop the foreclosure process. Let it run its course and hit the bottom." But the governor immediately added that "the idea of helping people refinance homes to stay in them is one that's worth further consideration. But I'm not signing on until I find out who's going to pay and who's going to get bailed out, and that's not something which we know all the answers to." Critics might decry that as an instant flip-flop, but a more charitable explanation is that it is the musings of a man who hadn't yet finished thinking the issue through. Ideally, though, a presidential candidate should know where he stands on major issues.
It is no secret that Governor Romney wants to be a business president. By contrast, President Obama is a consumer protection president.
Sovern is a professor of law at St. John's University School of Law and co-coordinator of the Consumer Law and Policy Blog.
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