ORLANDO — A year ago, President Obama championed the creation of a government agency that would be charged with protecting Americans’ wallets and restore certainty to the nation’s financial system.
But just weeks before its official launch, the future of the Consumer Financial Protection Bureau is in danger, hamstrung by a partisan standoff that has ground work on Capitol Hill to a virtual halt. The protracted battle threatens to rob the agency of many of the powers that Obama once cited as crucial to preventing another financial crisis.
The CFPB was hailed by administration officials as a centerpiece of the sweeping financial overhaul passed by Congress last year — and the part that most directly affects voters. The agency would consolidate many of the consumer protection functions of seven government regulators, but its real muscle would be its ability to write and enforce new rules and examine financial firms beyond banks.
Among the firms at the top of that list are the mortgage originators that promulgated some of the shadiest loans of the subprime crisis. It also includes the payday lenders and check-cashers that have long been criticized for charging exorbitant fees. The goal was to create a level playing field for all types of financial products.
“It is designed to make sure that everybody follows the same set of rules, so that firms compete on price and quality, not on tricks and not on traps,” Obama said when the law was signed.
But the law prohibits the agency from using any new powers until Obama appoints a director, a provision that has ensnared the CFPB in a bruising political fracas. The White House has yet to nominate anyone and has remained mum on future plans. Republicans in the Senate, which must confirm the appointment, have threatened to block anyone from getting the job without significant changes to the bureau.
The stalemate has lasted so long that it would be virtually impossible for the Senate to vet any candidate before the agency opens for business July 21, even if a compromise could be reached. The White House could make a recess appointment during the Independence Day holiday, but Republicans have promised to keep the Senate in session. The CFPB has said it will be ready to start work on the launch date, even if it has no leader and sharply curtailed authority.
The battle over the CFPB has hit a nerve among the progressive voters that played a crucial role in Obama’s election. They have pushed him to appoint fiery Harvard law professor Elizabeth Warren — who is credited with the idea for the bureau — to lead the agency, though she has had a rocky relationship with the banking industry. Several other names have been floated as potential candidates, including one of Warren’s top deputies, Raj Date. But liberals have rejected any alternatives.
Read more at The Washington Post.