Monday, July 18, 2011

Obama Nominates Cordray To Head CFPB; Vows to Fight Efforts To Repeal Fin'l Reg Reform; FSOC Finalizes Criteria for Systemically Important FMUs

At a press conference earlier today, President Barack Obama announced his nomination of Richard Cordray, a former Ohio Attorney General, and currently the Enforcement chief for the Consumer Financial Protection Bureau, to serve as the first Director of the CFPB.

The CFPB (or the ‘Bureau’ as referenced during the President’s press conference), created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, has been advised during its development stage by Elizabeth Warren, chair of the Congressional Oversight Panel formed a few years ago to oversee the results of the government’s TARP spending following the credit crisis.

Warren writes in the WhiteHouseBlog today of Cordray’s appointment, noting that, “On Thursday [July 21], the CFPB makes its transition from a start-up to a real, live agency with the authority to write rules and to supervise the activities of America's largest banks.”

Obama Will Fight Efforts To Repeal Financial Reg Reform
In announcing his nomination of Cordray, Obama defended the regulatory changes laid out in the Dodd-Frank Act, saying, “The financial crisis not the result of normal economic cycles or bad luck, [but from] abuses… I will fight any efforts to repeal or undermine the important changes we passed.” Read the full text of the President’s remarks.

Reflecting on the political dissent, Warren added in her post in the WhiteHouseBlog, “In May, forty-four Republican Senators wrote a letter saying that they will block anyone from serving as CFPB Director. Many of them don't like the agency or the ideas that led to its creation. They lost that fight last summer in a straight-up vote, but they say they will use a filibuster over a Director nomination to undercut the agency. Without a Director, however, the agency's authority over payday lenders, debt collectors and other non-bank financial companies can be challenged.
The Republicans say that they will permit a Director only if the agency is amended to make it less independent and less likely to act.” She added, “I remain hopeful that those who want to cripple this consumer bureau will think again and remember that the financial crisis -- and the recession and job losses that it sparked -- began one lousy mortgage at a time.

Learn more about Cordray in Meet Richard Cordray, the Candidate to Lead the CFPB, by Jacob Gaffney of Housing Wire.

CFPB Issues Progress Report
In related news, the CFPB issued a 32-page Progress Report today. As noted in the CFPB’s press release, the report “chronicl[es] [the CFPB’s] work to build the agency from the ground up since the passage last year of the Dodd-Frank Wall Street Reform and Consumer Protection Act.” The CFPB is also expected to issue two more reports this week.

FSOC Releases Final Rule: Criteria For Designating Systemically Important FMUs
Separately, the Financial Stability Oversight Council (FSOC), also formed as part of the Dodd-Frank Act, released a final rule today setting forth the criteria the agency will use to designate systemically important nonbank financial entities, more formally referenced in the rulemaking as Financial Market Utilities or FMUs. See FSOC final rule.

On this topic, Cheyenne Hopkins and Ian Katz wrote in Bloomberg earlier today, in Dodd-Frank Risk Panel Delays Create ‘Guessing Game,’ that an apparent delay in action by the FSOC in identifying the systemically important FMUs is causing regulatory uncertainty among nonbank financial institutions, including whether they will be required to raise capital.

Schapiro, Gensler, Geithner Among “Most Influential U.S. Financial Watchdogs” – Reuters
SEC Chairman Mary L. Schapiro, CFTC Chairman Gary Gensler, and Secretary of the Treasury Tim Geithner are among the “Most Influential U.S. Financial Watchdogs,” in a short-list published by Reuters earlier today. They are joined by Fed Governor Dan Tarullo, CFPB Nominee Rich Cordray, FDIC chairman-nominee Martin Gruenberg, Comptroller of the Currency-nominee Thomas Curry, House Financial Services Committee Ranking Member Barney Frank, and Senate Banking Committee Ranking Member Richard Shelby. (See Shelby’s May 5 press release regarding the letter from 44 Senators to the President on the CFPB, cited directly and indirectly by Warren and Obama, above).

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