Cordray's legacy of consumer protection worth defending

Cordray's legacy of consumer protection worth defending
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The resignation of Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB) is certainly sad news. His tenure epitomizes a “credible cop on the beat," as Sen. Elizabeth WarrenElizabeth Ann WarrenOvernight Regulation: Net neutrality supporters predict tough court battle | Watchdog to investigate EPA chief's meeting with industry group | Ex-Volkswagen exec gets 7 years for emissions cheating Overnight Tech: Net neutrality supporters predict tough court fight | Warren backs bid to block AT&T, Time Warner merger | NC county refuses to pay ransom to hackers Avalanche of Democratic senators say Franken should resign MORE (D-Mass.) would say, that puts consumers first.

As the first director of a new agency solely dedicated to consumer protection, his leadership demonstrates what keeping banks accountable looks like.

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Though his resignation may not come as a surprise — many speculated he would soon resign to run for governor of Ohio — it’s important to reflect on the agency’s impressive accomplishments and why its existence, in its current form, is critical to shield consumers from financial predation, which ultimately ensures the health of our financial sector and overall economy.

 

Facing a hostile Congress and recalcitrant financial industry, the agency’s record is impressive for its six years of existence. The CFPB returned $12 billion to more than 29 million Americans who were victims of financial predation. Nearly 50 million households benefited from the CFPB’s mortgage servicing protections.

The agency has protected service members from predatory practices — returning $130 million to service members, veterans and their families harmed by illegal and predacious behavior by banks. The bureau enforced actions against Wells Fargo for its defrauding of millions of customers, which resulted in a $100-million fine.

Through its rulemaking authority, the agency finalized a rule to rein in the predatory payday industry. The agency also banned forced arbitration clauses that deny consumers their right to sue banks for malfeasance, though Congress reversed this popular and common-sense rule.

The bureau cracked down on aggressive and fraudulent debt collectors and streamlined the processes by which the public can report financial abuse to the government. This is only a snapshot of the critical and remarkable work this young agency achieved under Director Cordray.

After the subprime mortgage meltdown, the CFPB was created as a watchdog to protect consumers against Wall Street wrongdoing. In the years leading up to the financial crisis, unscrupulous lenders manipulated and defrauded millions of American families, resulting in the loss of millions of jobs and homes and trillions of dollars in wealth.

In his six years as director, Cordray put his mission to protect these consumers into action. This work was crucial because, following the 2010 Tea Party wave, the public could no longer count on Congress to keep Wall Street in line.

Today, an increasingly small handful of corporate and financial executives wield too much power and influence over our political system, including our regulatory agencies. The public feels the imbalance — from stagnant wages and a high cost of living to long-term joblessness, while the stock market hits all-time highs and the wealthiest get wealthier than ever.

This can be attributed to a political and economic system that doesn’t work for the many and is tipped in the favor of the few. The CFPB is a government agency that answers not to the industry it regulates, like some captured regulators, but to the consumers — the people.

It is a small but important player that ensures the financial sector serves all consumers and the whole economy — not just the wealthy and powerful few.

The Trump administration, conservatives in Congress and corporate special interests are on a mission to tear down the economic guardrails put in place after the Great Recession. Now, President Trump has the responsibility to appoint a new director, who will undoubtedly not match the legacy of Director Cordray.

It’s reported that the president will name Office of Management and Budget (OMB) Director Mick MulvaneyJohn (Mick) Michael MulvaneyConsumers need a hero, not a hack, to head the CFPB Overnight Regulation: Feds push to clarify regs on bump stocks | Interior wants Trump to shrink two more monuments | Navajo Nation sues over monument rollback | FCC won't delay net neutrality vote | Senate panel approves bill easing Dodd-Frank rules Overnight Cybersecurity: Mueller probe cost .7M in early months | Senate confirms Homeland Security nominee | Consumer agency limits data collection | Arrest in Andromeda botnet investigation MORE as interim director. Mulvaney is a long-standing critic of the agency, who’s publicly stated that he doesn’t “like the fact that CFPB exists.”

With good reason, most Americans do not trust Wall Street and do not want the financial sector to continue to wield undue influence over the rules of our political and economic system.

Cordray went above and beyond during his time as director, and the day will come when a true consumer advocate again leads the agency to do the important job it was mandated to do.

Katy Milani is a program director for the Roosevelt Institute’s macroeconomic work, including Roosevelt’s programs on trade, financialization and market power.