Miami Herald | EDITORIAL

Hope for consumers


OUR OPINION: Confirmation of watchdog agency director should improve financial regulation

It was one of those coincidences too delicious to overlook: In the same week that the U.S. Senate finally approved President Obama’s nominee to head the government’s financial watchdog agency, new evidence surfaced to show that wrongdoing remains rampant on Wall Street.

Five years after the near-collapse of the economy, those who work in the nation’s financial headquarters apparently have not learned their lesson — all the more reason to bring in a sheriff.

Richard Cordray, whom the Senate approved last week by a vote of 66 to 34, has been waiting for approval for nearly two years, ever since he was nominated by the president to head the Consumer Financial Protection Bureau. Republican senators never liked the agency, fighting to keep it from functioning as intended from the day it came into existence and repeatedly blocking Mr. Cordray’s nomination by the promise of a filibuster.

Finally, last week, the gridlock was broken thanks to a threat by Democrats to put an end to filibusters of executive department nominations once and for all. Republicans stepped back, with Sen. Lindsey Graham, R.-S.C., candidly admitting that the fight was never about Mr. Cordray himself:

“Cordray was being filibustered because we don’t like the law,” Mr. Graham told The New York Times. “That’s not a reason to deny someone their appointment. We were wrong.”

Mr. Cordray’s nomination is one of several approved by the Senate in the thaw over filibusters, but it may be the most important. In the two years since it became active on July 21, 2011, as the key element of the Dodd-Frank financial reform law, the agency has responded to 175,000 complaints and returned over $430 million to wronged consumers — even without a confirmed leader.

Mr. Cordray’s approval allows the agency to ramp up its activity policing unscrupulous lenders — including the largest banks and credit-card companies — and the terms of mortgages, student loans and other financial transactions.

It came not a moment too soon. A couple of days after Mr. Cordray’s confirmation, an independent survey of the financial services industry by the law firm Labaton Sucharow showed that in many ways the industry remains in crisis. Among the discouraging findings:

“An astonishing 23 percent reported that they had observed or had first-hand knowledge of wrongdoing in the workplace and 29 percent believed that financial services professionals may need to engage in illegal or unethical behavior to be successful. An alarming 28 percent felt the industry does not put the interests of clients first and 24 percent admitted they would engage in insider trading if they could get away with it.”

The financial agency’s reach on Wall Street may be limited by legislation and the prerogatives of federal agencies that are supposed to be regulating investment banks and other influential institutions, but there are other areas where increased oversight can help consumers.

This includes abuses involving payday loans and mortgages, exorbitant fees by banks and credit-card companies and unscrupulous practices by abusive bill collectors.

Mr. Cordray’s confirmation comes too late to help millions of Americans unfairly wronged during the economic decline of the last few years, but it offers hope to millions more consumers who need protection against powerful financial institutions. Clearly, Mr. Cordray and the CFPB have their work cut out for them.

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