As many Presidents of the United States have done, President Obama avoided confrontation with Congress by appointing an individual to direct a government organization while lawmakers were on recess. Yesterday, the President appointed former Ohio attorney general Richard Cordray to the long-delayed position of director of the Consumer Financial Protection Bureau (CFPB). Now that this department has a director, it can move forward in enacting regulations — not just suggestions — for non-bank financial entities.

Lately, the CFPB has been working on simplifying customer agreements for financial accounts. A great example is this redesigned credit card agreements. The new design highlights the important terms of the agreement, describes financial terms in plain language, and helps consumers increase awareness of their obligations and rights. The bureau is currently working on a similar resigned agreement for mortgage contracts.

Without a director, none of these recommendations would be required to be enacted by financial firms. Some banks have already taken steps to improve communication, but banks are also regulated by the Federal Reserve. The Fed issued some regulations as part of the Credit CARD Act of 2009, but the regulations do not extend to non-bank financial firms.

The CFPB may face legal challenges from industry groups who insist that the bureau can have no power to issue regulations.

Who is Richard Cordray?

When Richard Cordray was the attorney general in Ohio, and when he was Ohio’s treasurer before assuming the role of attorney general, I would receive marketing emails from him every couple of months. He championed pro-consumer causes and worked to ensure the public had a better understanding of predatory financial arrangements. His emails were directed at the press to help raise issues in the media. For example, he campaigned for closing loopholes that allows payday lenders to practice predatory tactics and he warned consumers of scams related to the Cash for Clunkers program. Cordray lost in his campaign to be re-elected attorney general in Ohio.

Cordray wasn’t without enemies in the banking industry. He filed a lawsuit against Bank of America and its executives in 2009 on behalf of Ohio’s state pension funds related to the acquisition of Merrill Lynch.

Cordray is also a five-time champion on Jeopardy.

In general, judging by his past actions, Cordray appears to be comfortable with a position strongly in opposition with Wall Street interests, which is a change in direction for Washington politicians for as long as I’ve been an adult. Clinton, Bush II, and Obama have all, despite occasional moments of pro-consumer rhetoric, appointed Wall Street insiders to major financial roles in government and pseudo-government agencies.

There is some validity to that philosophy, after all, Wall Street executives have the connections and relationships with other Wall Street executives, and these connections are necessary for the government to operate efficiently with one of the largest driving forces of the American and global economy. The government, however, can’t be expected to issue effective regulations if it needs to stay on Wall Street’s “good side,” however.

It’s a tough balance to manage, and it’s one of the many reasons why I avoid politics.

Photo: Richard Cordray

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As every fourth graders knows, the United States Constitution begins, “We the people…” In the years following adoption of the Constitution, there have been movements to include more classes or types of human beings into that “people” represented by the federal government. The basic rights guaranteed by the core philosophy of the government once applied to a narrow definition of people, but as education levels across all demographics have risen among all socioeconomic subcultures, more people demand to have a voice, or feel that they are represented, in federal government.

The government has always listened most closely to those with money, and as money spread to groups other than white men with a certain heritage, more people gained access to representation. The framers of the Constitution may feel like they represented all colonists in the United States (but certainly not the displaced natives), but they were wealthier and more educated than the rest of their communities. As overall wealth and education increased, rights were extended to black Americans and women, but only when pressured by grassroots initiatives; never have the wealthy in power made any move to share that power unless pressured — significantly pressured, over a long period of time.

Today, the wealthiest still wield the most power in government. While corporations, as of yet, cannot run for office, those who run the corporations can direct profits to initiatives that ensure their interests are well-represented at the expense of just about everyone else in the country, including the middle class. Just like the threat of a terrorist attack (or previously, the Cold War) is used as a reason to increase defense spending for the benefit of corporations connected to the military, the threat of an economic collapse is used to help persuade the public that corporations deserve every break they can get. These threats may very well be real, but the result is that what matters most to policy makers are the concerns of a small, wealthy group of Americans.

You may not agree with any of the above. I don’t intend to take a political approach to anything on Consumerism Commentary, but this is the context that is needed to understand what is going on with the Occupy Wall Street protests which, while they have spread beyond New York, are relatively under-reported or ignored by the press.

The reason for the under-reporting, according to the protesters, is that the media, even the more liberal news media in New York like WNYC and National Public Radio, is financially supported by Wall Street firms. They claim that both the Democratic Party and the Republican Party have the same corporations pulling the strings.

If there’s anything that can be learned from the Tea Party’s slow ascent from counterculture to the mainstream, it’s that the media won’t grant much attention to a movement until it reaches a critical mass and takes an extreme position. If the Occupy Wall Street movement wants more people to be aware of the issue that only the rich are represented by government, they will need to push the issue much harder, find ways to get on television, and convince the public that they are much more than lone groups of harmless rebels with cardboard signs. The Tea Party protesters weren’t taken seriously at first, either, but they transformed their scattered movements into relative cohesion after they managed to gain more publicity through actions and voices that could simply not be ignored any longer.

It has never been a secret that money buys political power. I don’t see any way for that to change, even if Occupy Wall Street successfully increases awareness of the issue throughout the country. Regardless, the protests will need to crescendo in order to get anyone outside the movement to pay attention for more than a minute.

Should government represent all citizens equally regardless of financial condition? Does focusing representation on the wealthy “trickle down” (an economic policy championed by a Republican) to lower classes by virtue of boosting the economy through the “rising tide” analogy (which is attributed to a Democrat)? Is there any difference in the economic ideologies between today’s Democrats and Republicans when they are all funded by major corporations?

Photo: david_shankbone

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