Thursday, Apr 26, 2018
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Consumer compromise

Portman’s effort to move Cordray’s nomination forward must not water down consumer protection

For more than a year, Republicans in the U.S. Senate have fought the confirmation of former Ohio attorney general Richard Cordray as permanent director of the federal Consumer Financial Protection Bureau. Democrats will likely have to compromise to move Mr. Cordray’s nomination forward, but they should not allow Republicans to use this logjam to undermine the agency’s mission or gut its powers.

Sen. Rob Portman (R., Ohio) has asked Mr. Cordray to agree to “some basic accountability reforms,” positioning himself as a mediator between the White House and Senate Republicans. Mr. Portman, prudently, wants reforms to come from within the agency.

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President Obama is not in a position to ignore Mr. Portman. His appointment of Mr. Cordray is temporary, and with Republicans opposing the nomination, it will have trouble getting the 60 votes it needs to get a Senate floor vote.

Moreover, a federal appeals court has thrown a legal cloud over Mr. Cordray’s appointment. It ruled this month that the President violated the Constitution when he used similar recess appointments to fill three vacancies on the National Labor Relations Board last year.

Senator Portman told The Blade’s editorial page this week that he wants the Consumer Financial Protection Bureau to have its own inspector general to investigate complaints. That idea has merit: At least in theory, it would provide the added accountability that Republicans say they want without weakening the bureau’s powers.

Mr. Portman also proposes that a three-member board — instead of a director — lead the agency, but under a “strong chair” model similar to that of the Federal Communications Commission. That idea also deserves consideration: The chairman — in this case, Mr. Cordray — would still handle enforcement actions, which could otherwise get muddled and bogged down with more than one person responsible for executing them. Other board members would help set policy and regulations.

Finally, Mr. Portman wants to make it easier for a government oversight council to set aside regulations that don’t meet a public-interest standard. Mr. Portman says community bankers, auto dealers, and farm bureau officers have contacted him with concerns about the Consumer Financial Protection Bureau.

An able and honest public servant, Mr. Cordray is responsible for, among other things, protecting consumers from unscrupulous and deceptive mortgage loans, credit card deals, check cashers, payday lenders, financial-service fees, and investment schemes. Created by the 2008 Dodd-Frank Wall Street Reform Act, his agency is designed to deter the banking and Wall Street abuses that crashed the economy and bankrupted thousands of Americans in the past decade.

Mr. Cordray, whom Mr. Obama appointed on an interim basis in 2011, has done his job fairly and effectively. He has made credit-card contracts more readable and understandable. The bureau has issued rules aimed at deterring deception in mortgage lending, and has refunded more than $400 million to consumers who were victimized by abusive practices.

Senate Republicans, including Mr. Portman, say their problem is not with Mr. Cordray but with the agency’s structure. Under the circumstances, Democrats should consider any reasonable compromise Mr. Portman works out.

Senate Majority Leader Harry Reid (D., Nev.) had planned to put Mr. Cordray’s nomination before the Senate this month. He now plans to wait until summer, giving Mr. Portman time to submit a plan.

Senator Portman deserves credit for taking a more constructive path than just saying no. He declined to join 43 other Republican senators in sending a letter to President Obama this year that vowed to block Mr. Corday’s nomination.

But much is at stake. Trusting financial institutions to regulate themselves is a road to ruin. Mr. Cordray and Senate Democrats should not agree to changes that would undermine the critical mission of the Consumer Financial Protection Bureau.

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