Nel's New Day

January 5, 2012

Cordray Appointment Necessary, Resented by Conservatives

From the looks of headlines today, the storm surrounding the appointment of Richard Cordray as director of the Consumer Financial Protection Bureau is going to overcome some of the publicity of the New Hampshire primary in five days.

Republicans would do well to be afraid of him. First, he’s pretty intelligent. With a masters of economics from Oxford University and editor-in-chief of the University of Chicago Law Review, he clerked for Supreme Court Justices Byron White and Anthony Kennedy—a Reagan appointee—and represented the U.S. government before the Supreme Court three times, once for George H.W. Bush. Cordray is also an undefeated, five-time champion on Jeopardy!, winning $45,303.

Conservatives refuse to accept the existence of the CFPB because they don’t want any fiscal oversight, but they also oppose Cordray because he goes after both Wall Street financial institutions and individual executives. When he explained his lawsuit on behalf of Ohio pensions against the Bank of America Merrill Lynch merger because BofAS concealed billions of dollars of Merrill Lynch losses from their clients, he said:

“My understanding of a bonus is that it’s a special reward for superior performance. There wasn’t any superior performance for special reward; nonetheless, they [BofA and Merrill execs] wanted the bonuses. They ultimately, as best we know, got approval to pay out somewhere between $3 and $4 billion in bonuses, which was a very material element to the value of the merger. That was not disclosed to investors.

“…we’ve also pursued some of the top executives–not just the corporations themselves. We do think that they bear their share of the blame–we think that they need to be held accountable as well. We think that that’s a principle that sends a message to other corporate executives on Wall Street that is a further disincentive for this kind of thing in the future.”

Makes sense to me. Also what makes sense is the importance of the power that CFPB will have over groups now that the agency has a director:

Non-bank Mortgage Lenders and Services: Existing laws and rules governed these groups, but there was no oversight to make sure that they followed the law. Now monitors may discourage mortgagers from using “robo-signers” to foreclose on borrowers without any required paperwork.

Payday Lenders: Federal laws such as the Truth in Lending Act already govern these companies that make high-interest short-term loans, but again there is no federal oversight to guarantee compliance. Examiners can now go to firms suspected of illegal or abusive practices.

Private Student Lenders: Examiners already have the authority to check out these companies; now they can require lenders to follow existing rules and write new ones to guarantee fair lending.

Prepaid Debit Card Companies, Credit Bureaus, Money-Transfer Companies, Check Cashers, Debt Relief Services: Again subject to federal laws, these companies have little oversight.

Big Banks: Already overseen by the agency, nothing much will change. Banks will stay “too big to fail.”

In summary, the CFPB isn’t currently trying to pass new regulations; it’s just trying to enforce existing ones. Republicans don’t want these laws enforced! They should take note that Congress’s approval rating is 9 percent compared to 46 percent for President Obama. At this time there are 202 unconfirmed executive and judicial nominations because of the Senate Republicans’ custom of filibustering nominees and forcing cloture calls to create long delays.

Equally frustrating, however, is the state of “journalism,” including the reporting of President Obama’s appointments. Today’s article about the appointment of Cordray highlighted AP’s shortcomings. According to the Merriam-Webster Dictionary, journalism is “writing characterized by a direct presentation of facts or description of events without an attempt at interpretation.” That’s the way that I taught it. Any analytical person knows that Fox News is not journalism. But the venerable AP should be.

The lead sentence of this article, claiming to be news and not analysis, begins with the emotional words, “Defying Republican lawmakers, President Barack Obama on Wednesday barreled by the Senate….” The article continues with such phrases as “setting a fierce tone” and “sought to make a splash.” Another sentence begins, “In political terms, Obama’s move was unapologetically brazen, the equivalent of a haymaker.”

I expect such verbiage from my small-town newspaper because it pays very low salaries and has a publisher with no understanding of journalism. But the first sentence of the AP website states, “For more than a century and a half, men and women of The Associated Press have had the privilege of bringing truth to the world.”  Further down the introduction states, “That means we abhor inaccuracies, carelessness, bias or distortions.” Don’t believe them. Nel’s New Day does not claim to be unbiased; the AP does.

Meanwhile, the Republicans will be sure to continue the battle, possibly taking the President to court over something that they consider unconstitutional. Imagine where the approval ratings will head when they try to sue a president for legally helping the people of the United States to save money and avoid fraudulent companies!

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