Three years ago, as our economic system unraveled, some of the most commonly heard questions were: Why wasn't anyone paying attention? How could lenders give thousands of loans to people who couldn't possibly afford to pay them?
How could appraisals be so wildly inflated? How could investment companies place bets that a security would fall in value and still sell it to their customers?
Was there no one in the alphabet soup of regulatory agencies looking out for consumers as finance and investment professionals ran circles around them in a blaze of incomprehensible transactions?
The answer was no, there was no agency charged solely or primarily with protecting consumers.
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This is why a key element of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed last July was creating an independent agency to stop "unfair, deceptive, or abusive" lending practices. It's known as the Consumer Financial Protection Bureau.
The CFPB officially came to life Thursday but has not wasted any time during the gear-up phase. A high, early priority was to simplify the forms borrowers sign when they close on a loan to buy a house. The agency-in-waiting met with institutions and consumers then drafted two versions, put them up on its Web site and asked for comments. Some 14,000 people have responded.
The agency has recruited 400 employees, including researchers and examiners. The researchers are watching trends in the lending markets and keeping a close watch over jazzy new products. The examiners will scrutinize the books and practices of financial institutions to be sure they're playing by the rules.
So far, so good?
Not really. Republicans in Congress, including Sens. Mitch McConnell and Rand Paul, shiver in their boots when they even think about the CFPB. Their verbiage would lead you to believe that it could do for our economy roughly what Hurricane Katrina did for New Orleans. "I think it could be a serious threat to our financial system," McConnell said in May.
Republicans have burned a huge amount of energy demonizing Elizabeth Warren, the bankruptcy expert and Harvard law professor who came up with the idea for the agency and has been working as a special advisor to President Barack Obama to get it up and running.
Warren, who spoke at the University of Kentucky in April (go on YouTube to see for yourself) says threatening things like this about the agency's goals: "We want prices to be clear. We want risks to be clear. We want to make it easy to compare two or three mortgages to each other. Two or three credit cards."
Inflammatory remarks like that apparently have made Warren such a dangerous property that Obama did not nominate her to head the new agency, choosing instead one of her hires, former Ohio Attorney General Richard Cordray.
But the R's are still on the warpath, complaining that the agency and its director have too much power (to protect consumers? Don't want that to happen) and they won't approve any director until changes are made to give Congress more authority over the CFPB, a move that would ensure Wall Street, with its perennial generosity to congressional candidates, would also have more power over it.
There are legitimate reasons to be concerned about new or expanded agencies at any level of government. But that's not what this is about. The CFPB is a long-overdue attempt to level the playing field between consumers and financial institutions.
Kentucky is one of the poorest states in the union. People here need a fighting chance to make the best use of every dollar they earn. It's a shame their U.S. senators are trying to undermine an effort to give them that chance.