Go back five years, and the calamity on Wall Street was gaining momentum, the country two months from the collapse of Lehman Brothers and AIG. Much scrambling has followed in the aftermath, Congress and others looking to prevent the next meltdown. Steps have been taken in the right direction, yet much remains incomplete, along with concerns about insufficient capital requirements and banks still too big to fail.
One clear success has been the creation of the Consumer Financial Protection Bureau, the agency designed to bring needed balance to the relationship between borrowers and lenders. It has the job of overseeing financial institutions, from the Citigroups to payday operators, involving the likes of mortgages and student loans. The bureau aims to protect against abusive practices, some of which contributed to the depth and sweep of the trouble.
Now, the agency has secured the full authority provided by lawmakers. That clout came on Tuesday, with the confirmation of Richard Cordray as the first director, the former Ohio attorney general and state treasurer having served in the post the past 18 months through a recess appointment.
Already, the bureau has begun to meet its mandate, among other things, returning $400 million to consumers mistreated by credit-card companies and addressing mortgages that include exploitative up-front fees. Cordray has impressed allies and skeptics with his approach, steady, transparent, inclusive. That must continue, opponents looking for openings to roll back the bureau’s authority.
U.S. Sen. Rob Portman is one of those who argues the structure of the bureau is flawed. Now the Ohio Republican can pursue through the usual legislative process the changes he and others want. He has proposed legislation to attach an inspector general directly to the bureau, rather than relying on the inspector general for the Federal Reserve. He cites Cordray agreeing to heightened cost-benefit analysis of proposed bureau rules and regulations and to appearing before the Senate Appropriations Committee.
What has been preserved with the confirmation struggle resolved is the financial independence of the bureau. Its funding remains at a distance from the usual congressional appropriation process, where special interests, including those from banking, all too easily can hold sway.
That independence, along with authority residing in a single director, bolster this necessary addition to policy-making. Consumers finally have a well-equipped advocate, and the country a deterrent to misbehavior in the financial industry.