Since I plan to post from time to time, I think it is only fair to share where I am coming from.
Unless the NFL lockout ends today, this is not likely to be a happy day for me. I was not an advocate of the consumer protection provisions of Dodd-Frank generally or the CFPB specifically. I like to think that consumer financial services providers (and their regulators) learned something from the economic meltdown our country has experienced over the past few years. And I certainly think that the federal banking regulators have (and had) all the powers they need to ensure safe, sound, and fair practices by the banks under their supervision. (I concede that nonbanking companies, particularly those in residential real estate financing, did not have a regulator with the resources to ensure good behavior.)
I worry that Dodd-Frank is a classic case of regulatory overkill. Nobody can fairly say that banks are not heavily regulated. Now, on top of the CARD Act, Dodd-Frank’s substantive provisions and upcoming CFPB rules defining unfair, deceptive, and abusive acts and practices (assuming the CFPB ever gets a confirmed director or a recess appointee), national banks and federal thrifts have to worry about the potential application to them of state and local laws throughout the country if the new OCC preemption rules—pretty much the same as the old rules—are successfully attacked. Certainly, any substantial curtailment of federal preemption in this area will seriously damage the efficiency of national banks and their thrift counterparts. I am convinced that the OCC is right on target from a policy perspective and very much hope its regulations hold up.
Alan thinks that Richard Cordray will not be confirmed as CFPB Director, and I agree. Not only is there the dispute between Senate Republicans and the Administration over whether the CFPB will be directed by a board or a single director, there is the controversy over the “robo-signing” lawsuit Mr. Cordray brought as Ohio AG, seeking a penalty of $25,000 for each foreclosure affidavit (there were thousands) that contained incorrect information about the personal knowledge of the signer (and not about the borrower’s default or the lender’s right to foreclose). This lawsuit will certainly exacerbate Republican and industry concerns about the proper way to manage an agency that has the power to assess civil money penalties of $1 million per day for violations that cause no consumer injury and produce no improper profits.
Alan asks why President Obama nominated Richard Cordray as CFPB Director. I have to say that Alan does not seem to have a compelling answer, and neither do I. From a political standpoint, it seems to me that the President made it easier than he had to for the Opposition to filibuster his nominee. One way or the other, the confirmation hearings should certainly be interesting!