Can Richard Cordray clean up Abusive Practices by US Financial Institutions? Here are his plans

On January 5, 2012, Richard Cordray was appointed Director of the US Consumer Financial Protection Bureau, created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In his formal remarks, Mr. Cordray explained his focus. He noted that consumers need: (1) better information about the costs and risks of borrowing, (2) to be able to comparison shop for a good deal, and (3) the peace of mind that comes from knowing that the deal they were promised is the deal they are actually getting, not just tomorrow, but next month and next year as well. Consumers also deserve to have someone who will stand on their side, who will protect them against fraud, and who will ensure they are treated fairly in the financial marketplace.


He also noted that the role of the CFPB will be to: (1) collect stories and complaints regarding actions of financial institutions and (2) enforce provisions of financial legislation regarding non-bank financial institutions, such as payday lenders, mortgage servicers, mortgage originators (including mortgage brokers) and private student lenders.

In a TV interview with MSNBC, Mr. Cordray provided additional insight into his new job. He explained that the role of the CFPB will be two-fold: (1) examine financial institutions (i.e. conduct on-site supervision with his staff) and (2) enforce the law through the courts and through administrative procedures.


The appointment was made as a recess appointment, that is, while Congress is on recess over the New Year. The occasion provided a humorous view on the ways in which the US government is run, compliments of The Daily Show with Jon Stewart.

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Welcome to Safe and Fair Finance Blog

Each year, an estimated 150 million new consumers join the global economy. For most, using formal financial services is a new activity for themselves, their family members and their immediate circle of friends.

In the developing world, most will find the experience frightening. Some will also find it hazardous to their health. A loan of $100 can become an insufferable debt of $1,000. At the same time, $100 in savings can be lost in fees and charges, or simply lost in the bank’s computer system. A deposit of $10,000 may become an invitation for a visit from the local mafia. Mandatory motor liability insurance may be just another excuse for a tax or a bribe. Private pension funds are no more than a fantasy.

Even in industrialized economies, the fine print of legal documents can confuse all but professional lawyers and accountants. Particularly in low-income communities but also in the affluent neighborhoods, the attraction of low interest rates has led many to ignore the risks involved in mortgages that would re-price at full market rates or convert from foreign to local currency at the whim of the lender. With one in five subprime loans causing borrowers to lose their homes in the US, no community can consider itself immune from the risks of weak consumer protection and financial literacy.

The objective of this blog is to help policy-makers worldwide find solutions that both benefit financial consumers and strengthen financial institutions. The solutions involve all stakeholders—not just government authorities, but also financial industry associations, consumer organizations, academic institutions and the media. The approach is to take the lessons from the world’s best research and look for ways to applying it in each country. It means also contributing to the global dialogue on financial regulation and building a network of like-minded professionals.

The objective is summarized just seven words … safe and fair financial services for all.

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