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USA: Vote on new consumer watchdog chief shows who is standing with consumers and who is with Wall Street

Consumer Reports, a CI member organisation in the US, is calling for progress in appointing a director for the Financial Consumer Protection Bureau (CFPB), and allow it to get on with the vital task of protecting consumers.

The CFPB, a new government body which was established to protect consumers from abuses in relation to financial services, has suffered a setback at the hands of opponents in the Senate. Hostile lawmakers are demanding a radical curtailment of the agency's powers and have succeeded in preventing a vote on the confirmation of Richard Cordray, President Obama's choice for the job, as its new Director.

Created by the Wall Street reform law passed by Congress in 2010, the CFPB's stated mission is to make sure financial companies provide consumers with the information they need to understand the true costs and risks of different financial products. It has been charged with identifying and stopping unfair, deceptive, and abusive financial practices and keeping the rules governing financial service products up-to-date.

Consumer Reports, known until recently as Consumers Union, has been a vocal supporter of the agency since its inception, and in May 2011 urged Congress to oppose legislative attempts to undermine the organisation and limit its powers to protect consumers.

"Richard Cordray's nomination is being held hostage by lawmakers who seem intent on undermining this vital new watchdog for consumers," said Pamela Banks, senior counsel for Consumer Reports.  "Today's vote makes it clear who is standing with consumers and who is standing with the big banks and Wall Street."

Consumer Reports believes that opposition to the nomination is preventing the CFPB from exercising its full powers to protect consumers. Without a director, the CFPB is not able to exercise its authority to oversee non-bank financial institutions like payday lenders, debt collectors, check cashers and certain mortgage lenders who target vulnerable consumers, according to a report by the Treasury Department's Inspector General.   In addition, the report indicates that the CFPB cannot exercise its authority to require model disclosure forms that ensure fees for financial services are disclosed fairly and accurately unless it has a director. Likewise, its ability to prohibit unfair, deceptive, or abusive financial practices is limited without a director.

"It's no wonder there's so much cynicism about Washington these days," said Banks.   "Americans spent billions of dollars to bail out the big banks and now the agency that was created to protect consumers from unfair financial practices is under attack by some lawmakers in Congress."

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