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New CFPB Head Could Attract Lawsuits

New CFPB Head Could Attract Lawsuits

The decision by President Barrack Obama to appoint someone to lead the brand new Consumer Protection Agency has been seen as controversial one.

No more so than now with some banking industry experts now saying that lawsuits may be coming as a result of it.

According to a report from Candi Wolff, Citi’s executive vice president for global government affairs, there could well be lawsuits from “every quarter” aimed at the former Ohio attorney Richard Cordray who was controversially appointed as head of the new Federal Consumer Financial Protection Bureau. Candi Wolff has gone on record as saying that these lawsuits could come from various quarters such as labor boards, individuals and the U.S. Congress.

The problem that the critics have is that President Barrack Obama made the recess appointment which is allowed legally thanks to the Constitution, at a time when the Congress was not at recess according to the report. Republican lawmakers in an effort to block the move were due to hold a “pro forma” session in order to stop Congress from being properly adjourned.

Also it is expected that President Barack Obama’s resolve to go through with the Cordray appointment may end up having a affect on the other possible candidates that the White House was hoping to rush through in the future according to the report. This will comprise of top bureaucrats from the United States Department of the Treasury, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, all of whom are due to be put back for the foreseeable future. This decision may well create other legislative problems too.

If things weren’t tense before, the political stakes have been upped,

said Wolff.

Republicans in Congress may now see even less reason to seek compromise between the GOP and President Obama. Add to that a hostile election-year environment and even the most non controversial piece of legislation may not make it in 2012.

Luckily for customers, the CFPB, which has been around since 21st July 2011 and was formed in conjunction with the Dodd-Frank Act, has started to operate as it was supposed to under Cordray. It has now started to look at credit lines such as private student loans and payday loans, as well as keeping its work going in order to make things easier in regards to lending agreements and overseeing offers on credit cards.

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