Consumer bureau fights for Americans against Wall Street greed

After reckless actions by big banks crashed our economy in 2007-2008, I helped build a coalition to stand up to banks’ still-formidable lobbying and campaign money machine.

That coalition of consumer, civil rights, labor and community groups — Americans for Financial Reform — worked hard to enact legislation creating a government watchdog bureau to fight for the millions of American families who lost their jobs, homes and trillions of dollars of retirement income because of the banks’ unscrupulous behavior.

{mosads}I testified before Congress on numerous occasions in favor of a strong independent bureau. I personally witnessed the final negotiations of the Dodd-Frank Wall Street Reform and Consumer Protection Act conference committee. When the bill was finally signed, I was in the room, joined by many others who had fought for years for a financial system that treated consumers fairly.

Throughout those battles, one thing was always clear: Given the enormous power of the financial institutions that the Consumer Financial Protection Bureau (CFPB) would watch over, it would need independence and enough clout to stand up for all Americans — including students, older Americans, service members, veterans and consumers who might be cheated out of financial opportunity because of their race or class.

Independence requires independent funding. This is not a new or novel idea. Since 1864, national policy has dictated that bank regulators be independent from the political process exemplified by the lobbyist-influenced appropriations process.

All four bank regulatory agencies — the Office of Comptroller of the Currency (OCC), the Federal Reserve, the Federal Deposit Insurance Corporation and the CFPB — have had independent funding.

This new agency would also need a strong, independent director who could stand up to the banks, rather than a commission, which could be prone to gridlock or outside influence. Again, this was not a new or novel idea.

The bureau’s single-director structure was modeled after that of the OCC, the powerful bank regulator that still supervises all national banks. The CFPB’s director-succession plan — the one currently in dispute — was a key part of ensuring that independence.

As the first CFPB director, Richard Cordray set a high, admirable standard. In just six short years, the bureau returned nearly $12 billion to nearly 30 million victims of financial schemes.

Those schemes were hatched by wrongdoers ranging from Wall Street banks, mortgage companies and for-profit schools to debt collectors, credit bureaus and payday lenders. Prior to the creation of the CFPB, many of these violations would have gone unaddressed.

Despite that success — and the codified director succession plan — the Trump administration has installed a new director, Mick Mulvaney, who’s derided the very mission of the bureau. It is perhaps not an accident that in addition to ignoring the plain language of Dodd-Frank, this move evades the Senate confirmation process that might moderate any appointment. 

We don’t deny the president the right to nominate a qualified person. However, shortcuts that compromise the independence that the bureau needs, and was carefully designed to have, are another matter.

We must not lose sight of the vital mission of the bureau — to provide a strong and independent check on the enormous power of large financial institutions.

History shows that this power can be abused in ways that victimize many millions of ordinary Americans, and in its few years of existence, the consumer bureau has righted many such wrongs. It is in the interest of the vast majority of Americans that the bureau continue to do so. 

Ed Mierzwinski is consumer program director of the U.S. Public Interest Research Group, a consumer advocacy organization. He is a co-founder of Americans for Financial Reform, a progressive organization that advocates for financial reform in the United States.