November 3rd, 2011
03:29 PM ET
The White House is again pressuring Republicans in the Senate to support the nomination of Richard Cordray as head the Consumer Financial Protection Bureau. The latest pressure point: military families. In a conference call with reporters, White House officials cited the importance of the CFPB in the lives of service members to protect them from predatory lenders, certain types of installment loans and debt collectors who often harass service members during active duty.
Pegging this latest push to today’s testimony before the Senate banking committee by Holly Petraeus – head of Servicemember Affairs at the CFPB – representatives from the Treasury Department, the National Economic Council and the Executive Office of the President explained why the CFPB’s ability to help military families was effectively neutered by not having a director.
"The way the statute works, until such time as the CFPB gets a director it will not have the authority to supervise and enforce all these various consumer protection laws, with respect to payday lenders, debt collectors, etcetera, etcetera, the kinds of firms that we're talking about…that are preying on military families,” said Deputy Treasury Secretary Neil Wolin.
Cordray’s nomination recently passed out of the banking committee on a party-line vote, with all 10 Republican members voting in opposition, and Senate Republicans have vowed to block his nomination if it ever comes to the floor. On today’s call Stephanie Cutter – a deputy senior advisor to President Obama – used Mrs. Petraeus’ testimony as proof that military families are hurt by such Republican opposition.
Citing a specific question from Republican Sen. Richard Shelby about whether the CFPB had enough resources to do its job, Cutter quoted Mrs. Petraeus as saying that while the resources are there to the job, “they're not able to actually do the work.”
“She's very eager for the day when our non-bank supervision team can – if I can use an analogy – stop circling the airfield and get permission to land and start their work,” Cutter said, quoting from Mrs. Petraeus’ testimony. “She's referring there that the CFPB is unable to actually do its work to protect military families because Richard Cordray has not been confirmed and a director is not in place of the CFPB."
While denying that a recess appointment was being considered as an option for Cordray’s nomination, Cutter was very clear that their efforts today to point out exactly how powerless the CFPB is due to opposition “of a minority of the United States Senate is very much indeed part of the strategy of getting him confirmed.”
In addition to both the conference call and Mrs. Petraeus’ testimony, the White House also released a fact sheet explaining exactly how military families are particularly at risk of succumbing to dubious lending practices. Citing Defense Department statistics showing that nearly 50% of enlisted service members are under the age of 25, the administration tried to emphasize that much of the military may be inexperienced in financial matters and might not possess sufficient savings to act as a cushion in the case of a mistake.
“We are seeing a rise in troubling practices with respect to lenders targeting military families,” Deputy Director of the National Economic Council Brian Deese said on the call. “Congress has acted to provide protections to military families in capping interest rates for certain products, but what we're seeing is, through a combination of internet lending activities and other lending activities, lenders are skirting the rules here and providing loans that are – that have deceptive characteristics to these families.”
Deese also pointed to a drastic increase in money received for military education by private student loan providers as evidence that these lenders have “targeted the military community in a very aggressive way.”