By Erik Wasson - 09/05/11 09:03 PM EDT
President Obama's controversial nominee to head the Consumer Financial Protection Bureau will tell the Senate Banking Committee on Tuesday that the bureau should resort to lawsuits when necessary but only after careful consideration.
“If people are ignoring or evading consumer protections laws – and seeking to gain an unfair advantage over their law-abiding competitors – then litigation is an essential tool, and we will use it judiciously,” Richard Cordray will say at his confirmation hearing according to prepared remarks.
Cordray's remarks come as the former Ohio Attorney General and current CFPB enforcement chief faces a tough fight for the job. Republicans are uncomfortable having a director at all and want to dilute the position's authority, something they say will make it more accountable to Congress but which consumer advocates say will cripple its ability to take on confusing and fraudulent banking practices.
Cordray recounts in his testimony how he came to the newly created bureau and presents himself as a pragmatist.
He says that beginning nine years ago as a county treasurer he learned of the hardships which kept some individuals from meeting their financial obligations.
“Out of these experiences, I developed a strong resolve to address these kinds of financial difficulties that confront our communities. I quickly learned that there is no such thing as a one-size-fits-all solution as we seek to aid those who want to do the right thing and, when necessary, to thwart those who seek to take advantage of others. On a variety of issues, we experimented with new approaches, and we always sought to find new partners,” he says. He describes how he fought to require financial education in high school so graduates would be better able to understand financial products.
He also highlights that as Ohio state treasurer he expanded a low-interest loan program and fought to make it available to community banks. A key charge from the GOP has been that the Dodd-Frank law which created the CFBP has requirements that will hurt community banks.
Cordray also will try to argue that enforcing financial honesty helps legitimate businesses.
“At every stage of our work, I believed – and I believe today – that law enforcement which is evenhanded, fair, and reasonable not only protects consumers, but it also supports what I call the honest businesses in two key ways. First, the businesses that cheat can gain a significant and unfair advantage, and law enforcement protects honest businesses against the cheaters. Second, keeping the marketplace clean makes sure consumers are treated fairly and gives them confidence they need to participate in that market,” he says.