Enforcement chief pleads for political support from state prosecutors
The Consumer Financial Protection Bureau's enforcement chief asked state prosecutors around the country on Tuesday to support his fledgling agency and fight attempts by Republicans in Congress to gut its funding.
Richard Cordray, the bureau's head of enforcement, told a conference of state attorneys general in Washington that the agency plans to hit the ground running when it officially begins operations in July. But his speech highlighted the bureau's fragile political position as it faces intense opposition from many parts of the financial industry.
Cordray offered a feisty self-defense.
"The consumer bureau is dedicated to eliminating the kinds of tricks and traps that were used to ensnare consumers in financial products they could not afford and that too often drove them into foreclosure or bankruptcy," Cordray told the National Association of Attorneys General conference. "The consumer bureau is aiming to accomplish within one year what has been contemplated but not achieved for a decade and a half -- and we think we have made real progress even before that one-year clock has started ticking."
Under last year's Wall Street Reform and Consumer Protection Act, the bureau was given a rare, hard-to-touch funding stream in the form of a direct allocation from the Federal Reserve that would reach $500 million a year once the agency is fully up and running.
But Republicans, who nearly unanimously opposed creation of the bureau, have been eager to sever it from the Fed's purse strings so they can starve it through the appropriations process. The House-passed GOP spending bill would take a first step, reducing the Fed's first-year funding by about 40 percent to $80 million.
Cordray, who recently served as Ohio's attorney general, pleaded for support in shielding the agency from such attacks.
"Leveling the playing field between bank and non-bank providers of consumer financial products and services will require sustained resources in the form of consistent and reliable funding," Cordray said. "The non-bank sector consists of tens of thousands of companies, and it has never before been supervised by a federal agency. That is why it is so critical that the consumer bureau retains its independent funding model, a model that will allow it to respond rapidly and appropriately to legal violations and changes in the marketplace over time."
Congress has consistently depoliticized the funding of federal banking supervisors in the past, Cordray added, arguing that this precedent was critical to effective oversight.
Cordray also committed the bureau to work closely with state attorneys general, which it is already starting to do on a number of fronts.
"We will work directly with you, as well as with other federal agencies like the [Federal Trade Commission] to set enforcement priorities," he told the state prosecutors. "We know that you have a lot of experience bringing these kinds of cases under your state laws, and we look forward to bringing our new authority to bear against bad actors in the marketplace."