President Obama took the opportunity yesterday, while lawmakers were on recess, to appoint Richard Cordray as the Consumer Financial Protection Bureau's (CFPB) first director. The move is sure to ruffle a lot of feathers among Republicans in Washington D.C., but apparently Obama was sick and tired of watching the CFPB sit on the sidelines making suggestions that no one was obligated to listen to. They'll be a lot of partisan bickering regarding Obama's actions over the next few weeks, but I don't think most Americans really care about that. The fact is Cordray is in, and he's probably not going anywhere for awhile.
With Cordray officially at the helm as director, the CFPB can now move forward in enacting regulations and enforcing them against all financial institutions. In fact, in his first speech as director, Mr. Cordray said that the CFPB will immediately begin focusing on lenders outside the banking industry. So what does this mean? It means watch out payday lenders! You've got to be at the top of his list, and the CFPB is going to come out swinging since this is their chance to finally show the American people what they can do to protect consumers from predatory lenders. Payday lending is big business in America. According to the White House, over 20 million Americans use payday loans, and the average interest rate charged on a $100 loan over two weeks is 400%. That's not a typo either. 400%! It's not like the payday lending industry will go away in 2012, but the CFPB is certainly going to do everything in their power to make it more difficult and less profitable to be in the business of payday loans. And for those not willing to play by the new rules, Cordray has said "the consumer bureau will make clear that there are real consequences to breaking the law." This guy's not afraid to sue either. AIG, Bank of America, Fannie Mae, and Ally Financial have all felt the wrath of Cordray since 2009, and I have a feeling some big payday lenders will be feeling it next.
