WASHINGTON — The Consumer Financial Protection Bureau, centerpiece in the overhaul of financial regulations 18 months ago, was billed as a powerful new regulator to put the pocketbooks of average Americans ahead of the fat wallets on Wall Street.
But the agency has been hobbled since opening last summer because it couldn’t exercise some of its most important powers — such as new rules for mortgage brokers, payday lenders and financial companies outside the banking system — until the Senate confirmed its first director.
On Wednesday, President Barack Obama broke through a Republican blockade on confirming any director by appointing Richard Cordray for the job during a Senate recess and giving the new agency its full authority.
The move was applauded by consumer advocates, who had been pushing the White House to take the muzzle off its new watchdog.
“Congress wanted the bureau to protect consumers no matter where they shopped for financial products,” said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. “With a director, the public can now have confidence the consumer bureau is ready, willing and able to investigate their financial problems.”
Senate Republicans were furious at what they called Obama’s unprecedented end run around the confirmation process, which they were using as leverage to try to weaken the agency’s authority.
The appointment probably will be challenged in court, if not right away then once the agency issues its first rules. And that casts some doubt over its clout as the government’s guardian for consumers in the financial marketplace.
“It puts a big cloud over the bureau,” said David Hirsch mann of the U.S. Chamber of Commerce, one of the agency’s biggest opponents.
Hirschmann wouldn’t say if the chamber would sue, as it did in 2010 to invalidate a controversial Securities and Exchange Commission rule that made it easier for shareholders to force out company directors.
Among the new powers is the ability to take action against financial companies selling products or engaging in practices deemed “unfair, deceptive or abusive.” Payday lenders, with their high interest rates, could be one of the first targets, said Edward Mills, a financial policy analyst at FBR Capital Markets & Co.
He noted that the stock of the only publicly traded payday lending company — Advance America, Cash Advance Centers Inc. — was down nearly 10 percent on Wednesday, losing 88 cents to $8.30.
Richard Cordray file
Age: 52
Background: Ohio’s attorney general, 2008-10; previously served in the state legislature, as state solicitor and a county treasurer; in private law practice, 1988-90; clerk for Supreme Court Justices Byron White and Anthony Kennedy
Education: Michigan State University (1981), Oxford (1983, master’s in economics), Chicago Law School (1986)
Family: Wife Peggy, twin children Danny and Holly
Now you know: Five-time winner on the TV quiz show “Jeopardy” in 1987
