Consumer Bureau Protects the Prudent, as Well

Let's set aside the back-and-forth over the recess appointment of
Richard Cordray as chief watchdog at the new Consumer Financial Protection
Bureau. President Obama named the former Ohio attorney general to lead the
agency when the Senate was supposedly out of session, which he's allowed to
do.   
  
Republicans refuse to confirm him without changes that would render
the bureau toothless. And they hold that the Senate wasn't out of session
because they had someone whack the gavel every four days, calling the empty
chamber to order. Democrats tried the same trick during the George W. Bush
administration. The Constitution neglected to define "recess," so the courts
will.
 
The bigger question is why Republicans oppose an agency that would
stop financial companies from cheating and taking advantage of ordinary
Americans, which  happened to millions during the mortgage mania. They
complain that the current setup leaves the bureau "unaccountable" to the
American people, in part, because its funding comes automatically out of the
Federal Reserve's budget rather than through the congressional
appropriations process.
 
Unfortunately, the interests of the American people and individual
members of Congress are not always one and the same. The funding mechanism
was created precisely to remove the power of the purse from the industry's
handmaidens in Congress. During 2007 and 2008, the height of Wall Street
excess, conservatives cut the funding for the Securities and Exchange
Commission, whose job it was to patrol the markets. They apparently want the
ability to deny the Consumer Financial Protection Bureau the means to stand
between the unscrupulous financial salesmen and their unsophisticated prey.
 
Sen. Richard Shelby, the Alabama Republican, further warned that the
bureau "will directly affect every American household by limiting their
choices when purchasing financial products, restricting the availability of
credit to consumers" and so forth.
 
Limit consumer choice? Restrict the availability of credit? Jolly
good, I say. If taking poison off the shelves means limiting consumer
choice, that's OK. And if some people can't get a loan under reasonable
standards, so be it. And really, how does requiring that financial contracts
be written in plain English challenge the sanctity of free markets?
 
There is a moral case for protecting ordinary folk from abusive or
fraudulent financial products, but also a selfish one. We who were not
foolish, lazy or reckless during the housing bubble also paid a price. When
the slick operators' practices brought the financial markets to their knees,
the taxpayers had to bail them out or face another Great Depression. They
continue to suffer from the Great Recession that followed. (The operators,
meanwhile, ran off with their sacks of upfront fees and the pickings from
working-class pockets.)
 
We don't want that to happen again, do we? One may argue with reason
that other factors also crushed the financial markets -- government
guarantees for risky mortgages, shoddy and corrupt work by the financial
ratings agencies and a policy of low interest rates to keep the game going.
But a well-built jetliner has any number of backups ready to keep the thing
flying should one system malfunction.
 
Obviously, there's lots of money in letting Wall Street feed the
little guys into the grinder. The financial, insurance and real estate
industries have given Washington politicians $135 million in 2011-2012,
according to the Center for Responsive Politics. Republicans received 56.3
percent of that largesse, versus 37.7 percent going to Democrats.
 
While many of the contributors are fine, upstanding citizens, one
still senses a monetary motive behind the Republican campaign to defang the
Consumer Financial Protection Bureau. In the end, the Republican position
would seem more aimed at defending the cons than the Constitution.

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