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One Year Later, the CFPB Goes Live

Following nearly a year of anticipation among critics and admirers alike, the ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) formally opened its doors Thursday, taking over rule-writing and enforcement abilities for 18 consumer financial laws, preparing a host of new regulators, and assuming an array of powers provided by the Dodd-Frank Act.

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The launch notwithstanding, a tied-up confirmation process, scale-up difficulties, and stiff political opposition from the past year hold the ""CFPB"":http://www.consumerfinance.gov/ back, making some wonder whether the bureau will be able to effectively regulate the abusive, deceptive, and predatory financial practices as the law prescribes.

In a statement Monday, ""President Barack Obama"":http://www.whitehouse.gov/administration/president-obama defended the bureau and his new nominee to head it up, Richard Cordray, saying, ""American families and consumers bore the brunt of the financial crisis and are still struggling in its aftermath to find jobs, stay in their homes, and make ends meet. That is why I fought so hard to pass reforms to fix the financial system and put in place the strongest consumer protections in our nation's history.""

News reports confirmed Sunday that Obama would replace ""CFPB"":http://www.consumerfinance.gov architect and then-nominee Elizabeth Warren, who had endured gauntlet of hearings over the past year. Despite her departure, a jammed-up confirmation process for the new director-nominee stubs several powers and freezes nonbank supervision abilities for the bureau, even while Republican-controlled House committees hold firm on bills that would replace the head with a multi-member commission and rope the bureau into congressional appropriations.

""Given the fundamental flaws with the existing structure of the Bureau├â┬ó├óÔÇÜ┬¼├é┬ª the Senate should not confirm any person to lead the Bureau until some reasonable reforms are adopted,"" ""Sen. Richard Shelby"":http://shelby.senate.gov/public/ (R-Alabama) said in a Tuesday hearing. ""Those who are advocating for more accountability have been accused of trying to ├â┬ó├óÔÇÜ┬¼├ï┼ôgut', ├â┬ó├óÔÇÜ┬¼├ï┼ôcripple', or ├â┬ó├óÔÇÜ┬¼├ï┼ôdefang' the Bureau.""

""Sen. Shelby"":http://shelby.senate.gov/public/ remains one of 43 other Republican senators who refuse to confirm a nominee ""from any party,"" according to a letter the bloc sent to Obama in May. Analysts from both sides of the spectrum continue to weigh in on the political fight.

""University of Michigan"":http://www.umich.edu/ professor Michael Barr, a former Treasury assistant secretary regarded by some as the architect of Dodd-Frank, calls these attempts to reform the ""CFPB"":http://www.consumerfinance.gov ""really misguided.""

""In the past we had a system that tried to hide the ball, a system based on tricks and traps,"" he said in an interview with _MReport_. ""I don't think it makes sense to weaken the consumer bureau and I think it's part of a pattern on Capitol Hill where some forget the financial crisis we just went through.""

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Richard Eskow, a senior fellow at the left-leaning ""Campaign for America's Future"":http://www.ourfuture.org/, chalks up the political opposition to campaign contributions and ties to the financial industry.

""Their arguments have no merit, except as public displays on behalf of the big banks and their campaign money,"" he says. Eskow framed outgoing Warren as a source of knowledge that financial institutions and lobbyists fear for her ""public platform.""

With the ""CFPB"":http//www.consumerfinance.gov now open, ""I hope there├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós as much attention as possible given to the strategies being used to prevent it to effectively protect the public,"" he adds.

Their comments arrive alongside a Tuesday poll that casts the American public as largely in favor of new rules for Wall Street and a credible ""CFPB"":http://www.consumerfinance.gov. According to analysis by the ""Center for Responsible Lending"":http://www.responsiblelending.org/media-center/press-releases/archives/New-Poll-Demonstrates-Broad-Support-for-Financial-Reform.html, which released the ""Lake Research Partners"":http://www.lakeresearch.com/ poll, 74 percent, or nearly three-quarters of survey respondents, support the creation of a single agency, with Democrats and Republicans agreeing to the tune of 83 percent and 68 percent, respectively. The same poll held that more than 7 in 10 voters favor prohibiting payments by lenders to mortgage brokers who steer homeowners to mortgages for which they fail to qualify.

Mark Calabria, director of financial regulation studies at the conservative-leaning ""Cato Institute"":http://www.cato.org/, argues to the contrary, saying the ""CFPB"":http://www.consumerfinance.gov ""is absolutely going to be aggressive in trying to change the mortgage-servicing framework. They have a tremendous amount of leeway"" in reinterpreting older statutes, which he fears will ""make the next financial crisis more likely than less.""

He says that bureau executives and personnel cast ""mortgage brokers as a core cause of the financial crisis,"" and that lenders and servicers should expect the ""CFPB"":http://www.consumerfinance.gov to revisit and reinterpret statutes over the next five to 10 years.

These statutes include the transfers of authority the ""CFPB"":http://www.consumerfinance.gov received Thursday in the form of laws, rules, proposals, investigations, and personnel from seven financial regulatory agencies. Among the laws: the Truth-in-Lending Act, Home Mortgage Disclosure Act, Alternative Mortgage Transaction Parity Act, Real Estate Settlement Procedures Act, Home Ownership and Equity Protection Act, ""Federal Trade Commission"":http://www.ftc.gov/ (FTC) Act, and others.

Personnel from the ""FDIC"":http://www.fdic.gov/, ""Federal Reserve"":http://www.federalreserve.gov/, ""FTC"":http://www.ftc.gov/, ""HUD"":http://portal.hud.gov/portal/page/portal/HUD, ""Office of the Comptroller of the Currency"":http://www.occ.treas.gov/, and others continue to trickle over. The new hires join a staff of some 300 that will oversee consumer engagement, fair lending enforcement and supervision, market research and regulations, among other areas.

In testimony before Congress, Treasury deputy secretary Neil Wolin praised the bureau for its scale-up over the previous months, citing ""favorable recognition"" from inspectors general at the ""Federal Reserve"":http://www.federalreserve.gov/ and ""Treasury Department"":http://www.treasury.gov/Pages/default.aspx for the smooth implementation of regulatory and personnel transfers.

Nonetheless, in setting up a hotline for consumer complaints, the ""CFPB"":http://www.consumerfinance.gov will only initially be able to hear and address complaints about credit card practices. A bureau report titled"" ""Building Up the CFPB"":http://www.consumerfinance.gov/wp-content/uploads/2011/07/Report_BuildingTheCfpb1.pdf "" says that the system will ""eventually"" address complaints about other financial products, including mortgage loans.

Analysts say the bureau will accrue more of the abilities established by Dodd-Frank once the Senate confirms a director.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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