Jul 25, 2013 Sean Albert
Since coming into existence in July 2011, the Consumer Financial Protection Bureau (CFPB) has operated in a uncertain manner without an agency director. However, after some resistance by Republican members of the U.S. Senate, Richard Cordray was finally confirmed as the agency's first director this week, according to The New York Times. It's a development that should strengthen the legitimacy of the governing body and will certainly affect debt collection firms and short term lenders in some manner.
The confirmation process was a lengthy one, as the source reported that Cordray's approval by the Senate came just a day short of the two-year anniversary of his nomination for the position. Now, the CFPB has met the all necessary legal requirements for conducting its full range of powers, Obama administration officials suggested.
In a separate article published last year in The New York Times, Cordray stated that his agenda for financial regulation reform will focus on imposing stricter laws for nonbank enterprises such as debt services firms and credit bureaus that are responsible for creating consumer credit reports.
Due to the breadth of activities that these enterprises offer, Cordray noted that regulation and vigilance is necessary to protect consumer rights. In the article, he highlighted the fact that 20 million Americans use short term lending services every year.
Senator happy with appointment
Several senators praised the confirmation and were optimistic that the development could help the CFPB provide better oversight to protect consumers across the country. Sen. Tom Harkin, D-I.A., had long called for the confirmation to be pushed through and urged other senators to back Cordray. In a statement, Sen. Harkin expressed his satisfaction.
"I welcome his long-awaited confirmation and look forward to working with him so that the Bureau can fully carry out its mission," the senator said.
Cordray - a former Ohio attorney general - will want to start creating policies as soon as possible given the long confirmation period. For that reason, it's likely that debt collectors and short term lenders will see enhanced oversight and more stringent industry regulations passed. It may appear to be a negative development for such institutions, but it's one that should be embraced.
Additional attention may boost the reputations for these sectors among consumers and reputable businesses should have no problem adhering to proper policies. However, debt collectors would be wise to brush up on legislation that applies to their sector, while short term lenders should understand state laws that govern the activity.