Who Gains from Efforts to Weaken the CFPB?

Since his renomination as director of the Consumer Financial Protection Bureau, Richard Cordray has drawn praise from far and wide. Business and financial leaders as well as consumer, community, civil rights, labor, and faith groups have commended the Bureau for its openness, thoughtfulness, and balanced and responsible approach under Cordray’s leadership.

But that hasn’t stopped 43 Senators from signing on to a letter declaring their refusal to even consider this nomination unless their demands to weaken the consumer bureau are met.  Their stand multiplies the uncertainty created by an early February circuit court decision against a set of recess appointments to the NLRB made in the same time frame as Cordray’s recess appointment. Who does that uncertainty help?

Well, here’s one piece of evidence: At the height of the housing crisis, the Chance Gordon law firm persuaded desperate homeowners to pony up money for loan-modification help, and then did “little or nothing” for them, according to a CFPB complaint filed last July.  It sounds like a classic foreclosure relief scam – a type of scam that has robbed already beleaguered homeowners of their last dollars, and sometimes their homes.

Now, according to Bloomberg’s Carter Dougherty, the firm is trying to take advantage of the court ruling – and the difficulty of securing an up or down Senate vote on any nominee for the director’s job – to get the CFPB to back off. The firm’s attorney has written to the bureau seeking “a negotiated settlement… in light of a federal court ruling that invalidated so-called recess appointments similar to Cordray’s. “I want to give them an opportunity to resolve this without court intervention,” the attorney told Dougherty. “Resolving this informally would be preferable.”

Gordon has characterized his firm as a “legal publishing company,” which sold documents detailing certain lender abuses; any loan-modification help, he says, was a free add-on service. But the firm was charged with violating the Mortgage Assistance Relief Services rule, which, as Dougherty explains, “bans businesses from collecting fees until homeowners have acceptable written offers of a loan modification from their lenders.” The complaint also asserted that the firm “encouraged people to stop paying their loans in order to hire his firm, leading some customers to lose their homes.”

Senators opposing a vote on Director Cordray’s nomination might wish to check out the activities of the Gordon firm, and ask themselves if this is really the kind of business enterprise they want to support.