President Barack Obama recently installed a top executive for the new government agency tasked with protecting consumers from predatory or misleading lending practices, and has drawn considerable fire for doing so. Now, some say the complaints could lead to lawsuits.
The appointment of former Ohio attorney general Richard Cordray to the top role with the new federal Consumer Financial Protection Bureau was likely to be a controversial one even before it happened, and now some analysts believe that the move could lead to a number of lawsuits, according to a blog post from Candi Wolff, Citi’s executive vice president for global government affairs. Wolff’s post came when few other banks would speak out about the controversy, saying that the Cordray appointment would likely lead to legal action from numerous parties, including individuals, labor and community groups and even the U.S. Congress itself.
In fact, Republican lawmakers within Congress had been long expressed opposition to the appointment of anyone to the top CFPB role, and had vowed to block anyone nominated for the role, stating their belief that any such move would give the agency too much autonomous power. Instead, GOP members had pitched the idea of the CFPB being headed by a bipartisan committee.
However, Obama circumvented Republican aims by making the controversial appointment while Congress was in recess, though the suits are likely the result of this decision, as there is some question as to whether Congress was technically in recess, the report said. In addition, the move is likely to cause enough political tension to create a legislative logjam.
“If things weren’t tense before, the political stakes have been upped,” said Wolff. “Republicans in Congress may now see even less reason to seek compromise between the GOP and President Obama. Add to that a hostile election-year environment and even the most non controversial piece of legislation may not make it in 2012.”
Cordray has already had a significant impact on the CFPB’s day-to-day operations, as within a few days of his appointment, he expanded the agency’s focus to cover not just loan agreements and disputes over credit card debt, but also student loans, auto loans and payday loans, among other things. The CFPB had been operating in a limited capacity since gaining full regulatory power back in July.