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October 24, 2014

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Nevada Democrats push to confirm new top consumer finance watchdog

Nevada Democrats — with the help of a few consumer advocates — are kicking into high gear in anticipation of Thursday’s vote to confirm President Barack Obama’s nominee to lead the new Consumer Financial Protection Bureau.

It’s part of a full-on, nation-wide charge that’s being led centrally by the White House, which is arguing that without a director, the CFPB — a creation of the Dodd-Frank Wall Street reform bill — can’t do its job, and if it can’t do its job, consumers will be easy prey for non-bank creditors.

“When you look at Nevada, given what’s happened in the economy and with housing, consumer protection ought to be at the forefront,” said Obama administration senior adviser David Plouffe, arguing that fully-equipping the CFPB was as critical to economic recovery as job creation. “What people want is hey, how are we going to get out of this? What’s the pathway back to growth and job growth and middle class wages increasing? And there’s no one magic bullet of course ... but if you get all the other stuff right, and don’t get this right, you’re going to get undercut at some point.”

Yet the message that Democrats are billing as critically important is a difficult one to communicate.

Talk about payroll cuts? It’s easy for Nevadans to see the personal relevance of that: it shows up in every paycheck. Talk about unemployment insurance? There’s no more direct way to financially cripple an out-of-work job-seeker than taking their weekly check away.

But to win this fight to confirm the CFPB director — even though really, the fight-part isn’t about the would-be CFPB director — means getting Nevadans riled up about a guy most people haven’t even heard of.

“I think part of the issue is that there’s been kind of a generic criticism of Dodd-Frank, and I’m not sure anyone’s done as good a job as we should have of explaining what the benefits to the consumer are in terms of the Consumer Financial Protection Bureau provisions,” said Timothy Hay, former state consumer advocate for Nevada from 2000 to 2005, and former president of the National Association of State Consumer Advocates. “But there’s definitely a problem that needs to be remedied...[and] the agency can’t really run without a confirmed director.”

Richard Cordray is President Barack Obama’s nominee to serve as that director. A former Ohio state attorney general, he’s received bipartisan endorsements from across the map: 37 attorneys general (including Catherine Cortez Masto of Nevada) have urged his confirmation. No Republican Senators — including Nevada Sen. Dean Heller — have not registered a serious complaint about Cordray’s abilities as a capable professional.

But they have serious complaints about the agency he’s been tapped to run, which is why they’re voting “nay.”

“Senator Heller supports strong and effective consumer protection. However this agency, which was created by Dodd-Frank, has no measure of accountability,” Heller spokesman Stewart Bybee said.

Most of Dodd-Frank bill — reviled by Republicans to an extent second only to “Obamacare” — dealt with reforming and policing Wall Street and the big banks that became the chief villains of the economic meltdown of 2008. The CFPB handles all non-bank pieces of the puzzle: non-bank mortgage lenders, credit reporting bureaus, payday lenders and the like.

The White House points out those entities are perhaps even more relevant on a day-to-day basis to individual consumers than the big banks, especially in an economy like Nevada’s, where conditions are bleak enough to have driven many residents to the financial edge.

In a report the White House released over the weekend, officials laid out the numbers: 200 million people in this country rely on credit reporting agencies to report their credit history; 20 million use payday lenders that can charge up to $16 per $100 they loan (equivalent to an eye-popping APR of about 400 percent — most credit cards don’t get into APRs higher than the low 20 percent range), and over 14 percent of the country’s residents are going through debt collections.

“The issues at stake with this vote and this agency go directly to this basic financial pocket book issues that families are worried about day to day,” said Brian Deese, deputy director of the White House’s National Economic Council. “Can I get a mortgage. Can I trust when my mortgage broker is telling me something that I’m getting full information. How am I going to pay for groceries between now and when I get my next paycheck ... without a director in this new agency, you don’t have any cop on the beat.”

Part of what the Republicans are objecting to, however, is who’s copping the cop: they want Congress to have oversight of the director, instead of the independent board currently appointed to be the watchdog.

While that might sound good in theory though, White House officials argue that will just lead to an erosion of the agency’s independence.

“The concerns are hard to understand ... [the CFPB] has more oversight, more accountability, and more checks than any other independent financial regulator,” Deese said. “They passed the law. It’s the law of the land and every day that we wait, it’s a day that consumers continue to be at risk.”

In the end, this is not a fight that’s likely to serve its stated purpose. Only one Republican Senator, Scott Brown of Massachusetts — who is being challenged in 2012 by the Democrat who invented the CFPB, Elizabeth Warren — has said he would vote for Cordray. Democrats need seven Republicans, and all the Democrats, to carry the nomination.

But no one ever said the fight ends after Thursday’s likely-to-fail vote.

“We’re going to keep making the case if this vote does not go the way it needs to that this needs to get done,” Plouffe said this week.

After all, there’s a whole year left between tomorrow and the 2012 election — and the politicking around that point has already begun.

“Dean Heller has made it clear that his number one priority is not protecting middle-class families, it’s protecting Wall Street billionaires,” Rep. Shelley Berkley, challenger for the Senate in 2012, said in a call she scheduled with reporters on Tuesday to blast Heller for his expected vote against Cordray’s nomination, which he says he will not change. “Whether it’s intentionally keeping the watchdog agency incapable of holding Wall Street accountable or blocking middle class tax relief to protect millionaires and billionaires, Dean Heller is just plain wrong for Nevada.”

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