When someone has a project or cause that they really want to promote, it is understandable that they get defensive when others don’t feel the same way as they do about that subject. And when the person who is promoting something is none other than the President of the United States, sparks can really fly when he is trying to defend one of his pet projects. It makes sense, then, that Obama is doing everything he can to circle the wagons around the Consumer Financial Protection Bureau (CFPB), a bureau he put into place to supposedly protect people from financial predatory practices. However, the record has shown that the CFPB has overstepped its boundaries again and again, and that it continues to push the envelope. Obama is now slated to offer criticism of budget plans that the Republicans have pushed for in order to minimize funding for the CFPB.
Obama has threated to veto legislation that would, as he says, “unravel” the very law that helped to create the CFPB – the Dodd-Frank Wall Street Reform Law. In a speech that the POTUS gave in Birmingham Alabama, he said, “If Republicans in Congress send me a bill to unravel Wall Street reform, I will veto it.” Obama plans on presenting the CFPB as a tool that Wall Street reform is using to protect taxpayers and working households in the United States.
Obama may believe that taking power away from the CFPB, in the form of budgetary cutbacks, may prove to be just another way for the Republican budget to make it difficult for the CFPB to do the job it has been charged with, which may lead to the kind of reckless actions from Wall Street that led to the financial crisis to begin with.
Recently, the Director of the CFPB, Richard Cordray, announced new restrictions on Payday Lenders that he says are intended to stop people who take out short term loans from falling into “endless” cycles of debt that they will never be able to pay off. The new CFPB rules would force lenders to verify that borrowers will be able to pay back loans, prevent people from taking out loans if they take out 3 loans within 60 days and limit the terms of short term lines of credit to less than 45 days.
Obama seemingly holds the stance that the CFPB has taken action to crack down on the payday lending industry and eliminating abusive lending practices. He has indicated in the past that lenders who make profits from trapping people in ongoing cycles of debt need to find new ways of going about running their businesses.
While all of this is going on, the Democrats are busy accusing Republicans of attempting to sabotage the CFPB via the newly proposed budget process. The Senate Republicans’ new proposals feature language that would provide funding to the bureau via congressional appropriations. This is a far cry from how the CFPB now gets its funds, which is via a direct line from the Federal Reserve. Republicans have gone on record, calling the bureau unaccountable. However, if Congress is in charge of the CFPB’s funding, the Democrats are convinced that Republican’s will quickly cut off all of the bureau’s funding.
Despite the fact that Obama does not appear ready to back down on this issue, it is interesting to note that some Democrats have recently decided that they agree with the Republican’s stance on this issue. However, until the CFPB can be brought to full accountability and to begin to operate on a reasonable budget, it’s anybody’s guess what the bureau will choose as its next target.