10 August 2011
If an auto dealer sold you a lemon, would you purchase another car from the same dealer? Recent headlines have focused almost exclusively on the standoff between Congressional Democrats and Republicans over the national debt ceiling. Tensions and debates started and stopped, rising to the final crescendo of the historic downgrade of the U.S. government’s credit rating by Standard and Poor’s (S&P), which occurred on Friday, August 5th, 2011. Yet, this same company had a significant role in creating the financial crisis, rating subprime-backed toxics as AAA investments and that joined with other players in the financial industry over the years to discourage more aggressive financial regulation.
Interesting enough, the S&P was not the only one selling financial lemons last week. In the rush to get a debt ceiling deal passed and get out of town, the Senate cancelled the first nomination hearing for Richard Cordray – recently nominated to head the Consumer Finance Protection Bureau. Before Senators left town, however, Congressional Republicans didn’t miss an opportunity to block any chance of a recess appointment of a CFPB director by scheduling several "pro forma" sessions essentially to prevent the Senate from formally recessing. Cordray’s nomination faces strong resistance from nearly all Senate Republicans who have promised to block any nominee to head the agency unless it is significantly weakened.
Consumers are sick of lemonade. This downgrade underscores the need for Congress to put partisanship aside and support a consumer cop on the beat to lead an independent and strong CFPB.
Legislative Director, National Association of Consumer Advocates (NACA)