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Economy

REPORT: What The Consumer Financial Protection Bureau Has Done For You Already

Richard Cordray will make his first appearance on Capitol Hill today since President Obama recess appointed him as the first director of the Consumer Financial Protection Bureau. Senate Republicans blocked Cordray’s nomination — and promised to block anyone nominated for the director’s position — but now that the fledgling agency has a director, it can finally begin fulfilling its mandate to protect consumers from the predatory lending practices that were rampant prior to the financial crisis and during the recession that followed.

That Cordray is now the director will likely not quell Republican attacks on the agency or skepticism of his agenda. When Harvard professor Elizabeth Warren, who conceived the idea of the CFPB and was once the favorite to be its first director, testified before Congress last year, she faced relentless attacks from House Republicans who oppose the Bureau.

But despite GOP opposition, the CFPB has begun taking important steps toward fulfilling its mission. Based on Cordray’s prepared remarks and other reports, ThinkProgress compiled a rundown of the programs the CFPB has already established to aid consumers and the steps it plans to take in the future:

Supervising financial institutions and enforcing the law: In 2011, the CFPB launched a large bank supervision program aimed at ensuring that the nation’s biggest banks comply with federal consumer financial laws. It will also add heightened supervision of nonbanks, like mortgage lenders, servicers, brokers, payday lenders, and consumer reporting agencies. Such supervision should prevent the predatory and discriminatory lending and foreclosure fraud that played a role in the financial crisis. The CFPB has already begun enforcement actions, cooperating with state investigations into lending and foreclosures and filing lawsuits of its own against lenders that broke the law.

Establishing programs to help consumers: The CFPB has already established multiple programs to aid consumers and is in the process of creating others. Know Before You Owe was launched to bring transparency to the financial industry, allowing consumers to better understand agreements made on mortgage, student loan, and credit card lending. The Office of Servicemember Affairs has been tasked with aiding and educating current and former members of the military — many of whom were among the biggest victims of the housing crisis and the deceptive practices that followed. The Office of Financial Protection for Older Americans, meanwhile, is doing the same for senior citizens, who are often targets of scams and fraud. The CFPB has also established a number of feedback programs that allow consumers to share their own stories — good or bad — about dealing with the financial industry.

Addressing discriminatory lending: African Americans, Latinos, and other minorities were twice as likely to be affected by the housing crisis as whites. Many lending institutions pushed minorities into subprime loans even though they qualified for regular prime loans. The CFPB’s Office of Fair Lending and Equal Opportunity was created to end such practices by providing oversight and enforcement of fair lending laws and by working with private industry leaders, civil rights groups, and consumer advocates to ensure fair lending compliance.

Improving and streamlining financial regulation: The CFPB has already begun efforts to streamline and improve the regulations that affect the financial industry and will use feedback from both industry and consumer advocates to do so. The agency will update, modify, or eliminate unnecessary or outdated regulations, while attempting to make complying with others easier. Though Republicans have targeted the agency as anti-industry, the CFPB is committed to maintaining outreach to industry leaders. “A well-grounded understanding of the nation’s largest financial companies is essential to fulfilling our mission to improve consumer financial markets,” Cordray will say today.

Justice

Sen. Grassley Threatens To Lash Out At Obama By Punishing The American People

Almost immediately after President Obama’s recess appointment of Consumer Financial Protection Bureau Richard Cordray ended the Senate GOP’s lawless effort to shut down that agency by filibustering anyone appointed to lead it, those same senators started spouting false claims that the president’s actions were unconstitutional. Earlier this week, however, Senate Judiciary Chair Chuck Grassley suggested that he may go even further, retaliating against Obama by escalating the Senate GOP’s already unprecedentedly aggressive campaign of obstruction against the president’s nominees:

Grassley, the top Republican on the Senate Judiciary Committee, said today he prefers first seeking some Senate Democrats to join in a public pushback to Obama’s four recess appointments Jan. 4, including the installation of Richard Cordray as the new director of the Consumer Financial Protection Bureau. Short of that, Grassley said, Republicans may have to go it alone with tough actions that could include holding up pending nominations from a Senate confirmation vote.

“We have got to stand our ground,” Grassley said in an interview. “You can’t let a president who takes an oath to uphold the Constitution go around the Constitution. That’s what the checks and balances are.”

Let’s be absolutely clear about what is going on here. Grassley is mad at President Obama, but his retaliation will not really hurt President Obama. Obama lives in a very nice house and enjoys a fine life regardless of whether the Treasury Department has an Undersecretary for Domestic Finance or whether the federal courts have an adequate slate of judges. The people who will be hurt by Grassley’s tantrum are the millions of consumers who depend on functioning federal agencies to safeguard their rights, the workers who depend on workplace safety and fair wage laws in order to provide for them families, and the thousands of litigants who wait months or years for justice in a judiciary burdened by far too many vacancies.

Grassley is wrong on the facts when he claims that Obama’s actions are the least bit unconstitutional, but everyone makes factually mistakes and such errors can be forgiven. What is unforgivable is Grassley’s willingness to punish millions of innocent bystanders simply to exact some kind of revenge against President Obama.

Justice

Now That We Have A CFPB Director, It’s Time To Ban Corporate-Owned Courts In The Financial Industry

One of the most important, if overlooked, provisions in the law creating the new Consumer Financial Protection Bureau is a provision allowing the agency to push back against one of the most egregious errors committed by the Supreme Court in recent years — a line of decisions allowing companies to force their consumers into a privatized, corporate-owned arbitration system that overwhelming favors corporate parties. Now that CFPB Director Richard Cordray is in place, his agency can ban this practice altogether from much of the consumer finance industry:

(a) STUDY AND REPORT.—The Bureau shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.

(b) FURTHER AUTHORITY.—The Bureau, by regulation, may prohibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties, if the Bureau finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers. The findings in such rule shall be consistent with the study conducted under subsection (a).

In essence, this provision enables CFPB to prevent many lenders, investment advisers and other financial service providers from using one of the most abusive tools endorsed by the Supreme Court’s misreading of federal law — locking consumers out of real courts and forcing them into corporate-run arbitration. Moreover, because the Supreme Court recently piggybacked on its forced arbitration decisions to allow corporations to immunize themselves from the class action lawsuits that are essential to prevent companies from bleeding their consumers dry a few ill-gotten dollars at a time, CFPB can also eliminate this practice within much of the financial industry.

Lest there be any doubt, corporate arbitrators simply cannot be trusted to provide a fair hearing to consumers — in large part because corporations typically have a great deal of influence over who will arbitrate their cases. One of the most notorious forced arbitration firms — which thankfully was largely shut down after the state of Minnesota challenged its many abusive practices — once ordered a woman to pay a credit card company almost $8,000 because she had the same name as another woman who owed that company money. When a Harvard law professor who used to work part-time as an arbitrator handed down a single decision against a credit card company she was stripped of her caseload by the arbitration firm at the request of the credit card industry.

Our justice system cannot work when one side gets to choose who judges them. The CFPB’s new director has an important opportunity to restore a functioning system of justice to much of the financial industry — he should not hesitate one second before he takes it.

NEWS FLASH

Scott Brown Reluctantly Backs Cordray Recess Appointment | Sen. Scott Brown (R-MA), facing a tough reelection battle against the person who helped set up the Consumer Financial Protection Bureau, came out in support of President Obama’s recess appointment today of Richard Cordray to head the agency. “I would have strongly preferred…[a] normal confirmation process,” Brown told the Huffington Post’s Michael McAuliff, but the “system is completely broken.” Brown was the only Republican senator to support Cordray’s nomination.

Justice

Sorry, Boehner, The Senate Cannot Take Away Obama’s Recess Appointment Power By Pretending To Work

As ThinkProgress predicted yesterday, congressional Republicans did not wait long to whine that President Obama’s wholly legal decision to recess appoint Richard Cordray is unconstitutional. According to a blog post written by Speaker John Boehner’s staff, the Cordray appointment is unconstitutional because Obama defied an imaginary time-limit on his recess power and failed to respect the Senate’s decision to pretend that it’s actually doing something:

President Obama today made an unprecedented “recess” appointment even though the Senate is not in recess – “a sharp departure from a long-standing precedent that has limited the President to recess appointments only when the Senate is in a recess of 10 days or longer,” according to Senate Republican Leader Mitch McConnell (R-KY).

It turns out that the action not only contradicts long-standing practice, but also the view of the administration itself. In 2010, Deputy Solicitor General Neal Katyal explained to the Supreme Court the Obama administration’s view that recess appointments are only permissible when Congress is in recess for more than three days.

First of all, Boehner needs to learn to count. For constitutional purposes, the Senate has been in recess since December 23. Although a single senator has opened a pretend session that lasts about half a minute — what is known as a “pro forma” session — every three days since then, these pro forma sessions have no impact whatsoever on the president’s recess appointment’s power. As Steven Bradbury and John Elwood, two key constitutional advisors during the Bush Administration, explained in 2010:

Historically, the recess appointments clause has been given a practical interpretation. As Alexander Hamilton wrote in Federalist No. 67, the clause enables the president to keep the government fully staffed when the Senate is not “in session for the appointment of officers.” . . . [A 1905 Senate report] cautioned that a “recess” means “something actual, not something fictitious.” The executive branch has long taken the same common-sense view. In 1921, citing opinions of his predecessors dating back to the Monroe administration, Attorney General Harry M. Daugherty argued that the question “is whether in a practical sense the Senate is in session so that its advice and consent can be obtained. To give the word ‘recess’ a technical and not a practical construction, is to disregard substance for form.”

The Senate, of course, does not meet as a body during a pro forma session. By the terms of the recess order, no business can be conducted, and the Senate is not capable of acting on the president’s nominations. That means the Senate remains in “recess” for purposes of the recess appointment power, despite the empty formalities of the individual senators who wield the gavel in pro forma sessions.

Moreover, even if the Senate could stave off a recess by convening in the Neighborhood of Make Believe, it is simply not true that three days must pass before the president’s recess power kicks in. Though it’s true that Katyal once said that “I think our office has opined the recess has to be longer than 3 days,” an off-the-cuff comment by the Deputy Solicitor General does not have the power to change what the Constitution actually says. As the highest court to consider issue explained, “[t]he Constitution, on its face, does not establish a minimum time that an authorized break in the Senate must last to give legal force to the President’s appointment power under the Recess Appointments Clause.”

NEWS FLASH

President Obama Has Made Far Fewer Recess Appointments Than Any Recent President | Despite the inevitable conservative complaints that President Obama is engaged in some kind of massive overreach by recess appointing Richard Cordray as the nation’s chief consumer financial protection watchdog, the truth is that Obama has used his recess appointment power very sparingly. After today’s appointment, President Obama will have made a total of 29 recess appointments. By comparison, George W. Bush made 171 recess appointments; Bill Clinton made 139 recess appointments; George H.W. Bush made 77 recess appointments; and Ronald Reagan made 243. When you divide these numbers by the number of years each man spent in the White House, it reveals that Obama is far and away the least likely president to invoke this power:

NEWS FLASH

White House Attorneys Conclude Nothing Prevents Obama From Making Recess Appointments | As ThinkProgress explained yesterday, the Constitution empowers President Obama to make a recess appointment right now. In a possible sign that the president is poised to appoint Richard Cordray as head of the Consumer Financial Protection Bureau, the Wall Street Journal reports that White House attorneys have reached the exact same conclusion.

Update

Citing anonymous sources, the AP is reporting that Obama will recess appoint Cordray as soon as today.

Justice

McConnell Takes Every Single Judicial Nominee Hostage To Sabotage Consumer Protection Agency

On Saturday, the Senate closed off what was supposed to be its last day of business for the year (the Senate may need to reconvene, now that Speaker John Boehner has blown up a deal to extend tax cuts to middle class Americans). Yet the Senate closed out the year without confirming any of the 21 judicial nominees currently awaiting a vote on the Senate floor. Worse, according to the Senate’s chief obstructionist, these judicial nominees — along with more than two dozen other nominations — are intentionally being held hostage in order to prevent President Obama from recess appointing anyone to head the Consumer Financial Protection Bureau:

At the end of a rare Saturday session, the Senate’s last day of official business for the year, McConnell blocked an effort by Senate Majority Leader Harry Reid (D-Nev.) to confirm more than 50 executive and judicial branch nominations awaiting Senate action.

And he laid out a condition to releasing his objection: “confirmation from the administration that it will respect practice and precedent on recess appointments.”

McConnell added that he needed from the White House “assurances that have been routinely given at this point with regard to recess appointments.”

It’s unclear just what “practice or precedent” McConnell is referring to, but there is no one who has less standing to complain about unprecedented action than McConnell himself — the lead architect of the Senate GOP’s nihilistic campaign to make it impossible for President Obama to govern. Without an agency head in place, the CFPB cannot perform many of its core functions. Yet, Senate Republicans are filibustering CFPB director-in-waiting Richard Cordray in order to sabotage this newly created consumer protection agency. If McConnell really cares one bit about respecting “practice and precedent,” he can show it by ending this blockade and recognizing that the Senate minority does not have the legitimate authority to effectively repeal an entire agency.

McConnell could also show that he respects practice and precedent by returning the Senate to the way it operated before he became minority leader. Simply put, no one in recent American history has done more to abuse the filibuster than Mitch McConnell — as demonstrated by the massive spike in votes attempting to break filibusters once McConnell took over the minority caucus:

President Obama is not powerless, however, against McConnell’s effort to sabotage the CFPB. If McConnell will not end his blockade, Obama can invoke the Roosevelt Precedent, which allows him to appoint Cordray the second the Senate adjourns for the year.

Justice

Sen. Mike Lee Admits He Filibusted CFPB Nominee To Sabotage The Agency

Earlier today, 53 percent of the Senate voted to move forward with Richard Cordray’s nomination to lead the new Consumer Financial Protection Bureau — depriving him of the supermajority he needs in order to be confirmed. One of the senators joining this filibuster, Sen. Mike Lee (R-UT), was uncharacteristically candid about why he helped build this wall of obstruction — he simply wants to sabotage the agency:

I have met Mr. Cordray, and my decision to oppose his confirmation by the Senate has nothing to do with his qualifications. Rather, I feel it is my duty to oppose his confirmation as part of my opposition to the creation of CFPB itself. [...] Confirming any director for this bureau would be tantamount to agreeing that we need a uniquely powerful super-agency that is not even designed to prevent a repeat of the financial crisis. Until the CFPB is reformed, I will not support it in any way.

Simply put, this is nothing less than a direct assault on the rule of law. The CFPB was created by an Act of Congress and can only be repealed or modified by an Act of Congress. By his own admission, Lee’s filibuster is an attempt to make an end run around the Constitution’s legitimate lawmaking process.

But, of course, this filibuster is also just one more example of the Tea Party senator’s nihilistic approach to governance. Lee believes that federal child labor laws, FEMA, food stamps, the FDA, Medicaid, income assistance for the poor, and even Medicare and Social Security violate the Constitution. He not only sponsored a radical constitutional amendment that would force the United States to adopt Tea Party fiscal policy forever, he then openly admitted that he was using last summer’s debt ceiling crisis to extort the rest of the Congress into passing his amendment.

Fortunately, President Obama does not need to allow Lee’s nihilism to shut down an essential check on Wall Street’s excesses. When the Senate adjourns for the year, Obama should immediately invoke the Roosevelt Precedent and recess appoint Cordary.

NEWS FLASH

Senate Republicans Successfully Filubuster Consumer Protection Bureau Nominee | Senate Republicans today, as expected, filibustered the nomination of former Ohio Attorney General Richard Cordray to be the first director of the Consumer Financial Protection Bureau. The vote was 53-45, with 60 votes needed to break the filibuster. Sen. Scott Brown (R-MA) was the only Republican to vote in favor of confirming Cordray. Sen. Olympia Snowe (R-ME) voted present.

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