Wealth Finance

President Obama needs to nominate someone for the Consumer Financial Protection Bureau soon in order for the new agency to be up and fully functional by its planned July 21 launch six months from now, consumer advocates said today.

“This agency needs to be firing on all pistons by the time it opens its doors,” said Travis Plunkett, legislative director of the Consumer Federation of America. But he and other advocates, gathered at a press conference to unveil areport on the fledgling agencys progress, noted that given the well-publicized opposition from Republican detractors in Congress, the process of confirming a nominee could take a very long time. Given that likelihood, Plunkett said, “We would need to see a nominee soon.”

Without a new, permanent head, the CFPB might not be able to perform certain functions, in particular regulating non-bank financial instutions such as payday lenders, acknowledged Pamela Banks, a senior attorney with Consumers Union, parent of Consumer Reports. On the July 21 “transfer” date, the CFPB will automatically take over regulation and oversight of banks that lend to consumers, a function previously under the purview of other federal regulators. But because the CFPB will be the first federal body to regulate non-bank lenders, the bureau might not have authority for that function without someone in charge, Banks said.

Plunkett praised CFPB interim head Elizabeth Warren and said she certainly had the qualifications to be the Presidents permanent appointee to head the bureau. But he did not to commit to endorsing her over other candidates.

The advocates noted that, among other hopeful signs, they were heartened by the quality and varied backgrounds of staffers already chosen for various CFPB posts. They noted the selection of Massachusetts Banking Commissioner Steve Antonakes as director of bank supervision and of Ohio Attorney General Richard Cordray as director of enforcement as examples of well-rounded hires. “Its a tremendous start in building the organization,” said Ed Mierzwinski, consumer program director at US PIRG. The CFPB also is developing an Internet portal and designing a system to handle consumer complaints about lenders.

Advocates acknowledged the new bureau faces significant challenges, particularly from Congressional opposition. This week, The Wall Street Journal reported, Republican members of Congress began discussing whether to hold hearings on the CFPB and the financial reform law that created it. Also this week, Rep. Randy Neugebauer, R-Tex, who leads the House Financial Services Committees oversight and investigations subpanel, sent a letter to the CFPBs interim head Elizabeth Warren raising questions about how the bureau will operate, and even whether it should operate at all.

“I am quite pleased with the professionalism and enthusiasm with which you have approached your job,” Neugebauer wrote. “I do, however, firmly believe that you are tasked with executing a fatally flawed plan.”

Consumer activists said they were commited to ensuring the bureau maintained its ability to protect consumers as intended by the law. The CFPB will be the only federal agency dedicated to looking out for financial consumers, noted Nancy Zirkin, executive vice president of the Leadership Conference
Education Fund. For that reason, she said, it is “exteremely disturbing” to hear members of the new Congress talk about cutting the bureaus funding and allowing veto power by other angencies. “They want to severely weaken the one agency … dedicated to giving consumers a fair shake,” Zirkin said. “We wont let that happen.”

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