CFPB: Spilt Milk

Guest blog by Amber R. Van Til, IBA Vice President-Government Relations

My son Preston turned five years old last month. With his newfound maturity comes the inevitable, “Mommy, I can do it MYSELF!” This fierce independence has its benefits: Preston now can help around the house, dress himself and wash himself in the “tubby.” But his independence also means that mom and dad have to set specific boundaries to offset Preston’s new powers. As I tell Preston, we are his system of “checks and balances.” (A lobbyist can find political humor in almost any scenario.)

Recently Preston has taken to making bottles of milk for his little brother. This act of kindness never ends well … except for our dog Lucy. In order to thwart the problem, we have moved the milk to a higher shelf in the refrigerator, and have replaced the milk with less-messy juice boxes. Check.  Balance. Crisis averted.

If only the controversial Consumer Financial Protection Bureau (CFPB) were that easy. Tomorrow, July 21, the CFPB begins its official operations. Many lawmakers credit the creation of the CFPB as a gap-filler, intended to provide consumer protection oversight of financial products, such as mortgages, bank examinations, credit scoring and credit cards. Since its creation, however, the CFPB has garnered significant debate in Congress about the scope of its authority.

On Monday, President Obama announced that he has selected former Ohio Attorney General Richard Cordray to lead the CFPB. Cordray boasts an impressive resume: former Ohio treasurer, state representative, candidate for governor, law clerk to the U.S. Supreme Court and, perhaps most notably, a five-time winner on the quiz show “Jeopardy.” Cordray currently serves the CFPB as director of enforcement.

Due to procedural rules, a nomination to lead the CFPB needs the support of 60 of the 100 senators in order to be confirmed. Last May, 44 Republican senators vowed that they would not vote to approve any candidate to run the bureau without first making changes in its structure, funding and scope of authority. Republicans contend that Cordray himself is not the obstacle; rather, they object to flaws in the CFPB. They say its organization runs counter to the constitutional principles of checks and balances and argue that it is “one of the least accountable and most powerful agencies in Washington [DC].”

Republicans cite three main objections:

  1. A single person is responsible for the operations of the CFPB.
  2. The CFPB receives funding from the Federal Reserve, independent of approval from any congressional committee.
  3. The CFPB wields broad rulemaking authority, leading to concern that ill-conceived rules established by the new agency could cause banks to fail.

Good intentions easily go awry if not well-planned and implemented. Like my son Preston’s bighearted desire to serve his brother a bottle of milk, the CFPB has the noble cause of protecting the consumer. However, if we don’t give Congress the specific power and authority to “move the milk higher,” the American people and the financial industry may find themselves standing in a pool of spilt milk.

About the author: Amber R. Van Til, IBA Vice President-Government Relations, is primarily responsible for all state legislative issues concerning Indiana’s banking industry including, but not limited to: Indiana BANKPAC, the Annual Silent Auction, the IBA Key Contact Banker Committee, maintenance of CapWiz and the government relations news updates in IBA E-News. She joined Community Bankers Association of Indiana in 2002 and has retained her government relations position for the IBA upon the merger of the two organizations. Amber earned a bachelor’s degree from the University of Indianapolis and a JD from the Indiana University School of Law.

2 Responses to CFPB: Spilt Milk

  1. Mike Bauer says:

    Well said, Amber.

  2. Sometimes the simplest analogies from everyday life are the most effective in communicating a substantive message – Kudos Amber!

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