Cordray spent part of his first day on the job speaking at the Brookings Institution, where he characterized the CFPB’s chief responsibility as clarifying financial products and services aimed at consumers, to avoid crises like the subprime mortgage debacle.
“The single event that has limited credit most substantially for Americans in my lifetime is the financial crisis of 2008 and 2009,” said Cordray. “That meltdown was caused, in turn, by some of these problems and failing to regulate parts of markets.”
With Cordray now at the helm, the CFPB can begin addressing some of these unregulated markets.
While the CFPB has been at work for more than a year, its operations were limited to larger banking institutions until its director was in place, under stipulations in the Dodd-Frank financial regulatory reform law. Cordray's arrival allows the CFPB to begin oversight of nonbanks, including payday lenders, mortgage servicers and originators, and private purveyors of student loans, among others.
These groups are key players in the consumer finance world because of their reach – 20 million American households use payday lenders, according to Cordray – and because “they have largely escaped any meaningful federal oversight” even though they typically compete with banks.
Cordray’s plans for the CFPB come amid strident criticism of the manner of his appointment.
Republicans were almost unanimous in their disdain for the president’s maneuver. Senate minority leader Mitch McConnell (R) of Kentucky objected to the move on constitutional grounds, saying it “fundamentally endangers” Congress’s ability to check the power of the president.