Sat January 7, 2012
More Than Finance Ahead For New Consumer Chief
SCOTT SIMON, HOST:
President Obama may have riled Republicans with his recess appointment of Richard Cordray to lead the Consumer Financial Protection Bureau, but there's bipartisan agreement on Mr. Cordray's qualifications. He served as Ohio's attorney general. Before that, he was Ohio state treasurer. For more, we're joined by our friend from the business world, New York Times op-ed columnist Joe Nocera. Joe, thanks for being with us.
JOE NOCERA: Thanks for having me, Scott.
SIMON: Joe, when we spoke in December, the Senate had blocked any confirmation vote for Richard Cordray. You talked about all the things you thought the bureau couldn't do because they didn't have a director. Well, now they do. What do you expect to see?
NOCERA: Well, I definitely expect them to try and get their arms around this whole sphere of unregulated financial institutions. We're talking about payday lending. We're talking about debt collecting. We're talking about the companies that rate your credit - the credit scoring companies, which have enormous importance. They affect 200 million people. And you can't buy a house or a car without a decent credit score. This has potential, by the way, to be enormously popular politically as well.
SIMON: Mr. Cordray's spoke with NPR's ALL THINGS CONSIDERED earlier this week and said this:
RICHARD CORDRAY: Well, the key for us is that part of our job is to make prices and risk clear for consumers so that they can make good, better informed judgments for themselves. That doesn't mean that we're prejudging any particular product. We will be regulating payday lenders, mortgage brokers, private student lenders - and that's a very important step forward for us.
SIMON: Joe, how do you expect the bureau to enforce this?
NOCERA: Well, I mean, they have staff, they have enforcement staff. What he said at the beginning of that clip is very much what they have been doing so far - trying to simplify forms, trying to allow people, for instance, who are going to get an adjustable rate mortgage, to see what the ultimate cost would be versus a 30-year fixed mortgage, trying to have credit card statements that people can actually understand. Very simple consumer-friendly things. As they move forward, they almost certainly will bring an early action against, for instant, a payday lender that is deceiving consumers or a debt collector that is using underhanded tactics. I mean, those are very politically popular things to do and these are areas that have been unregulated for a very long time.
SIMON: Now, let me ask you about the political dimensions of this appointment, 'cause Mr. Cordray, everyone notes, was a five-time undefeated "Jeopardy!" champion. He's also been elected to statewide office in Ohio a couple of times. Ohio's a significant state politically.
NOCERA: Well, I mean, that is true. But I'm not convinced that that's why he got the job.
SIMON: It was also ground zero for the mortgage crisis.
NOCERA: That's right. And he has a very aggressive track record as attorney general in Ohio of trying to prosecute mortgage fraud. He got a $725 million settlement out of AIG. You know, he sued GMAC, General Motors' mortgage arm. You know, he's done a lot in this area. And the person who hired him originally was not President Obama; it was Elizabeth Warren, to make him her first enforcement chief, well, as he was setting up the bureau. Now, of course, it became impossible politically to get Elizabeth Warren named, so the president decided to appoint Cordray instead. I think the politics have less to do with Ohio than with the whole idea that we're going to stand up for consumers, we're going to do some aggressive things on behalf of consumers and we're going to contrast that behavior with what the Republicans are doing, which - as Obama would phrase it - is protecting the banks.
SIMON: Nevertheless, there are going to be some legal challenges questioning the constitutionality of the recess appointment, even the powers of the agency. Will that practically limit what the bureau can do with these present circumstances?
NOCERA: They say no. I say probably. It seems very likely that they will spend a lot of their first year in court defending themselves on five or six or seven different grounds, and that has to be inevitably time consuming.
SIMON: So, even if Mr. Cordray's is eventually legally upheld, over the next year there's just going to be so much on his plate, the effectiveness of the agency might be diminished.
NOCERA: I think that's possible. I mean, the senators and the chamber of commerce and all the opponents of this are going to do their best to muck up the works as much as possible between now and this November.
SIMON: Joe Nocera, op-ed columnist for the New York Times, speaking with us from Southampton, New York. Joe, thanks so much.
NOCERA: Thanks for having me, Scott. Transcript provided by NPR, Copyright National Public Radio.