Senate Republicans Intend to Hold Wall Street Reform Hostage

The Consumer Financial Protection Board (CFPB) is working, really well. It’s one of the most important and effective parts of the 2010 Wall Street reform law. For the first time, customers who get mistreated by their bank or their credit card aren’t alone in a maze of paperwork. Now there’s a way to introduce some real accountability into the process.

Unless, that is, Senate Republicans get their way.

Last week we learned that Senate Republicans are once again threatening to filibuster Richard Cordray, President Obama’s nominee to head the CFPB. They say they won’t confirm any director for the agency—crippling its ability to function—until changes are made to how the agency works. The changes they demand would neuter the agency, shifting the balance of power away from consumers and back towards banks.

Republicans couldn’t pass these changes to Wall Street reform through Congress.  So, as Adam Serwer puts it, “having failed to prevent the financial regulation law from being passed, they are now seeking to nullify it through procedural extortion.” Through the filibuster, a minority of the Senate is trying to prevent the implementation of a duly-passed law.

Paul Krugman notes that Senate Republicans’ tactics here—whether it’s blocking the appointment of a director or forcing through the changes that they demand—will have the same effect: enabling banks to exploit their customers with impunity.

Why is consumer financial protection necessary? Because fraud and abuse happen.

So the consumer protection bureau serves a vital function. But as I said, Senate Republicans are trying to kill it…Mr. Cordray, whose work has drawn praise even from the bankers, is clearly not the issue. Instead, it’s an open attempt to use raw obstructionism to overturn the law.

Just four years after runaway bankers brought the world economy to its knees, Senate Republicans are using every means at their disposal, violating all the usual norms of politics in the process, in an attempt to give the bankers a chance to do it all over again.

In a completely unsurprising development, the finance industry has given over $143 million in direct contributions to the 43 Republican Senators who have pledged to filibuster Cordray unless they get their way.

(It goes without saying that using the filibuster to cancel out a law and enforce changes you couldn’t pass otherwise is the sort of abuse that the filibuster “compromise” was supposed to avert.)

The CFPB is an energetic agency taking on challenges nobody has before—and getting results. Just look at the $140 million in rebates for Capital One customers, $85 million in rebates from American Express, and $200 million in rebates for Discover customers—real penalties for deceptive practices. Look at their homeowner-friendly new mortgage rules or the real results from their customer complaint portal. This is an agency that, for the first time, is able to tackle misconduct by the finance industry at scale. Real people are benefiting already, and it changes the incentives for dishonest behavior by banks.

The finance industry is used to running Washington, and they’re used to an enormous amount of power relative to their customers. They’re used to cheating and getting away with it because, on their own, no single consumer had the time or energy to stand up to it.

The CFPB changes that. And that’s why Senate Republicans are trying to change the CFPB.