Excerpted from an editorial in Tuesday's St. Louis Post-Dispatch
Unless you work in the banking industry or a nonbank financial business like a mortgage company, debt collecting or payday lending, you took it on the chin in the U.S. Senate last Thursday.
Forty-five Republican senators voted to block a confirmation vote for Richard Cordray, President Barack Obama's nominee to head the new Consumer Financial Protection Bureau.
This is one of those confusing process votes that sometimes obscure what's really at stake. So let's keep it simple: The effect of this vote is a big win for a financial industry that is desperately trying to avoid being fully accountable to its customers.
It's a win for opaque language in credit agreements and mortgage documents. It's a win for jacking up credit rates or taking away your house. It'll make it easier for debt collectors to hound you. Private student loan lenders will continue to operate in the shadows. The industry that did so much to bring on the Great Recession continues to fight every effort to rein in its excesses.
The CFPB was created by the Dodd-Frank Financial Reform and Consumer Protection Act of 2010. It was the brainchild of Elizabeth Warren, the Harvard bankruptcy expert who insisted that consumers deserved an agency designed to protect their interests. Obama appointed Warren to set up the agency. But it was clear that she could not win Senate confirmation. Obama instead appointed Cordray, a former Ohio attorney general who was Warren's deputy.
She returned home to Massachusetts and now is running for the Democratic nomination to challenge Republican Scott Brown for his seat in the Senate. Brown knows that opposing financial reform is a losing proposition; he was the sole Republican to vote to allow Cordray's nomination to come to a vote.
His fellow Republicans tried to cloak their votes as matters of principle. They just didn't want more regulation — though more regulation would have helped avoid the 2008 meltdown. They wanted a board in charge of the CFPB, not just a single individual, and they wanted the CFPB to have to come before Congress for its money, rather than be an independent arm of the Federal Reserve.
Obama reacted to the Senate's vote by suggesting that he might use a recess appointment to put Cordray in charge through 2012. Legally, it's not clear that Obama could make a recess appointment without the help of Republican House Speaker John Boehner of Ohio.
The financial industry has bought itself lots of friends in Washington. You haven't. The industry won. You lost.
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