A watchdog, now sedated
Come the end of this month, buyers and borrowers will have to brave the wilds of an often ferocious financial industry without a trusted companion watching their backs. All but the fatter bankers of America will be poorer with the departure of Richard Cordray, since his 2013 appointment by President Obama the first and only director of the Consumer Financial Protection Bureau, who last week announced his impending departure one year short of his term’s end with his powers as public watchdog whittled down to the vanishing point.
Congress last month trampled to pieces one of Cordray’s most potentially far-reaching accomplishments: a ban on credit contracts that force disputes into private arbitration, barring class-action suits in public court.
A federal appeals court meantime weighs whether President Trump can just fire Cordray point blank, as his advisers have been said to desire.
All this as Trump’s banking regulators rush to strengthen the hands of slippery payday lenders charging usurious interest rates, while also relieving mainstream financial institutions of responsibilities for making loans and opening branches in lower-income communities.
Cordray stuck it out till there was nothing left to stick to. That White House budget director Mick Mulvaney — who has called government rules of the kind CFPB issues “a slow cancer” — is likely to provisionally take Cordray’s place says it all: An important advance in government service to the American people is in deep freeze, if not done for. But not before leaving an indelible legacy. It was Cordray’s CFPB that unearthed the catastrophic extent of fraud at Wells Fargo, where employees opened millions of phony customer accounts, and it was the CFPB that then fined the banking giant $100 million.
It was the CFPB that last month finalized a rule requiring payday lenders to first determine whether prospective borrowers had — get this! — the means to repay their loans.
And earlier this year, with New York Attorney General Eric Schneiderman, the CFPB sued a finance company they charge scammed 9/11 rescue and recovery workers out of Zadroga Act victim-compensation funds and former NFL players of their concussion payments.
Well done. May the sleeping giant rise again.