CFPB Now Can Police Lenders, Servicers

President Obama’s recess appointment of Richard Cordray on Wednesday will clear the way for the Consumer Financial Protection Bureau to use its full enforcement and regulatory powers to police all mortgage lenders and servicers. 

During a standoff with Republicans who were blocking Cordray’s confirmation by the Senate, the White House acknowledged that CFPB’s enforcement powers were limited to federally insured banks until a permanent director was installed. 

Until then, the CFPB could not exercise its authority to take enforcement actions against nonbank mortgage lenders and servicers. But all that will change now that Cordray is the first official director of the CFPB, an agency created under the controversial Dodd-Frank Act of 2010. 

“I am pleased to say that we will now be able to exercise the full authorities granted to us under the law and begin to supervise these nonbanks,” director Cordray said in a blog posting Wednesday afternoon. 

The former Ohio attorney general had been serving as the CFPB’s director of enforcement. The bureau is expected to take its first enforcement actions early this year. 

The recess appointment also clears the way for director Cordray to approve final rules for streamlining mortgage disclosures and creating an “ability to repay” standard for mortgage loans. 

Legal experts raised doubts about the CFPB’s authority to approve new rules authorized by the Dodd-Frank Act without the agency having a director to take charge of the bureau.

Meanwhile, Senate Richard Shelby, R-Ala., said the recess appointment will install an “unaccountable bureaucrat who will have immense power over the economy.” 

The ranking Republican on the Senate Banking Committee led the effort to block Cordray’s nomination.  Sen. Shelby and 43 other Republicans insisted on restructuring the bureau, changing its governance to a five-member commission with Congress approving its budget. 

“Instead of working in a productive way with Congress, the administration has chosen to undermine any attempt to bring accountability and balance to the bureau,” said Sen. Bob Corker, R-Tenn. 

The White House communications director Dan Pfeiffer noted that critics of the bureau don’t want a “tough watchdog” to protect consumers. “Because of the President’s leadership and decisive action, the American people will have a consumer watchdog fighting tooth and nail on their behalf,” Pfeiffer said. 

Consumer and civil rights groups, and many state AGs welcomed the President’s decision to install Cordray as the CFPB chief.  

Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_509/cfpb-police-lenders-servicers-1028173-1.html

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