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Cordray issues a warning to money giants 
January 7, 2012 

WASHINGTON — Richard Cordray said yesterday that the new federal consumer-protection agency he heads will aim to make “sure that financial institutions are playing by the rules,” warning the industry that “there are real consequences” for violating the law. 

The former Ohio attorney general gave a speech at the Brookings Institution one day after President Barack Obama used a recess appointment to name him director of the Consumer Financial Protection Bureau. Cordray said he has “examiners on the ground today with broad authority” to inspect loan documents and ask “tough questions” of financial institutions. 

“The consumer bureau will make clear that there are real consequences to breaking the law,” Cordray said. “We have given informants and whistle-blowers direct access to us. We took over a number of investigations from other agencies in July, and we are pursuing some investigations jointly with them.” 

By outlining such a tough approach, Cordray is likely to win support from consumers across the country. But his speech could send a shiver through the nation’s financial industry, which has looked with dread upon the new bureau with its broad regulatory authority. 

Congress created the bureau in 2010 when it approved a sweeping overhaul of the nation’s banking regulations. The new bureau will regulate a wide array of consumer financial products, such as home mortgages and credit-card offers, while encouraging financial institutions to write easy-to-understand terms. 

Last summer, Obama tapped Cordray to head the bureau, but Sen. Rob Portman of Ohio and 44 other Senate Republicans used a filibuster to block the nomination last month. 

Portman and other Republicans insisted they would oppose confirming any director until Obama agreed to modify the bureau’s powers. In particular, they wanted Congress to have the power to approve the bureau’s budget instead of it being financed by the Federal Reserve Board. 

In an appearance on Wednesday in Shaker Heights, Ohio, Obama used a recess appointment to bypass the Senate. Cordray took the oath of office on Wednesday evening. 

Because of Obama’s move, Cordray said, “For the first time, we can exercise the full authorities granted to us under the new law. That is the specific difference that having a director makes.” 

Cordray said the bureau will immediately begin supervising what he called nonbanks, such as payday lenders, mortgage services, private student lenders and “other firms that often compete with banks but have largely escaped any meaningful federal oversight.” 

Cordray made clear his belief that the financial industry had a major role in the 2008 collapse of the U.S. economy. He said that “hidden fees and exploding interest rates have infected more products and services. Novel and exotic mortgages battered housing markets and triggered the financial crisis that wrecked the economy and hurt millions.” 

Read this and other articles at the Columbus Dispatch




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