Richard Cordray, the newly-appointed director of the Consumer Financial Protection Bureau, has big plans for the large regulatory agency — but wants everyone to know that the vast authority his agency has over the financial market will be used for good.
“The Consumer Financial Protection Bureau is the nation’s first federal agency whose sole focus is protecting consumers in the financial marketplace,” Cordray said in his prepared remarks before the House Committee on Financial Services on Wednesday.
“I understand there has been a lot of anxiety,” Cordray said of the CFPB’s regulatory power in an Q&A interview in the Washington Post. “People aren’t sure what to make of it. They’re worried about a new agency and how it will exercise its authority. But we’ve been reasonable, open-minded, accessible and genuinely focused on trying to get this right.”
Cordray said banks and finance companies already used to government oversight will experience a different kind of regulation.
“We have to institute our supervision program for financial institutions that are used to being regulated, but not necessarily used to being regulated with a focus on consumer protection,” he said. “It’s an adjustment for them.”
Many organizations have come under federal supervision for the first time.
“But in the non-bank sphere, they’re often not used to being regulated at all, or only on the state level. In that area, there has been a real shift toward more of a compliance mentality,” Cordray said.
The CFPB, created by the Dodd-Frank Act in 2010, is a response to the financial crisis of 2008. Cordray said that competition between regulated and non-regulated institutions contributed to the financial crisis.
“It was a lot of the unsupervised areas where some of the most irresponsible practices occurred,” Cordray said. “We have line of sight now across markets, which is critical for regulatory success.”
In his prepared remarks before the National Baptist Convention in Charlotte, North Carolina last Thursday, Cordray also used biblical imagery to compare the CFPB’s role in financial regulation to Aaron and Hur upholding Moses’ arms in book of Exodus.
“Like Aaron and Hur, who stood on each side of Moses and held up his hands when he grew weary in the battle, faith leaders use their own strength to steady others and enable them to carry on the fight. So you try your best to offer guidance. You try your best to offer help,” Corday said. “Now you have someone to lean on when people come to you with their financial troubles.”