Press Gaggle with Press Secretary Jay Carney and Deputy Treasury Secretary Neal Wolin on Cordray Nomination, 12/7/2011
James S. Brady Press Briefing Room
10:31 A.M. EST
MR. CARNEY: Good morning, everybody. Thanks for coming to this gaggle. I'm pleased to be joined today by Neal Wolin, the Deputy Treasury Secretary, to discuss the need to get Richard Cordray, our nominee to lead the Consumer Financial Protection Bureau, confirmed so the bureau can exercise its full ability to protect consumers. As you all know, the Senate will vote today -- or rather tomorrow -- on Cordray's nomination.
Before we start, I wanted to run through a few things that we are doing today to continue to make the case to the American people on the need to get Cordray confirmed. This afternoon, a bipartisan group of attorneys general from across the country will renew their call for the Senate to confirm Cordray. Earlier this fall, 37 attorneys general from across the country urged the Senate to confirm Cordray, who was a former attorney general of Ohio, to lead the CFPB.
At 2:00 p.m., Maryland Attorney General Douglas Gansler, Mississippi Attorney General Jim Hood, North Carolina Attorney General Roy Cooper, and Republican Utah Attorney General Mark Shurtleff will hold an avail at the stakeout location here at the White House. If the rain persists, we will advise a new location here.
Also this afternoon, we will be hosting a call with Iowa Attorney General Tom Miller, Philadelphia Mayor Michael Nutter and Salt Lake City Mayor Ralph Becker on the Cordray nomination. That call will happen at 12:30 p.m., and you can email us for call-in information.
I would note that today the Conference of Mayors, 61 mayors from across the country, called on Congress to confirm Richard Cordray. In addition, senior economic officials will be doing regional satellite time into key targeted states in advance of the vote.
And as you all know, the CFPB is holding an event in Cleveland today where they will be announcing new "know before you owe" efforts to streamline and simplify credit card forms and help consumers better understand the terms and conditions of their credit card agreements.
And with that, I will turn I turn it over to Deputy Secretary Wolin. I will stay after -- if you address your questions to him on this issue, and I will remain to take your questions on other issues. I'm aiming for a hard out at 11:00 a.m. because I have a meeting. Thanks.
DEPUTY SECRETARY WOLIN: Thanks very much, Jay.
Good morning. As you all know, Congress passed financial reform 18 months ago, after a financial crisis that cost 9 million jobs and trillions of dollars in Americans' wealth. The CFPB was a critical piece of that reform, and it's already doing groundbreaking work on behalf of American consumers.
As part of its "know before you owe" campaigns, the CFPB has launched commonsense initiatives on mortgage disclosure forms and student aid agreements, and as Jay just mentioned, today they're launching a new initiative to create a model credit card agreement that is shorter, clearer, and explains terms up front.
These three commonsense initiatives can help millions make more informed financial decisions and avoid the traps of confused and fine print.
Although the CFPB is doing excellent work already, the Dodd-Frank statute left critical authorities for protecting consumers contingent on their having a director. Six months ago, the President nominated Ohio Attorney General Richard Cordray -- former Ohio Attorney General Richard Cordray to serve as its first director. He is exceptionally qualified. Many industry and advocacy groups and in government have voiced strong support for him. Thirty-seven state attorneys general, including a number of Republicans, have signed a letter in support.
Despite those outstanding qualifications and the broad support for Mr. Cordray, many Senate Republicans have said they will not confirm any individual without fundamental changes to the Dodd-Frank statute. Their position continues to leave the door wide open for the same abuses that occurred prior to, and were an important cause of the financial crisis that we are still feeling the effects of.
Without a director, the CFPB cannot oversee payday lenders, private student loan providers, and other non-bank lenders, including certain mortgage originators and servicers, as well as debt collectors and credit reporting agencies.
This non-bank sector has been the source of some of the most harmful, deceptive, unfair and predatory lending practices. And until a director is confirmed, these institutions will operate without supervision and oversight, just like before the crisis. That means that millions of American people will remain vulnerable to some of the same regulatory gaps that helped to create the financial crisis, and they will lack basic common-sense protections of the sort I mentioned at the top.
Now, some have asserted that the CFPB will not have adequate accountability, and I wanted to address those assertions right now, because the CFPB has an unprecedented set of accountability provisions that make it, frankly, more accountable, uniquely amongst bank regulators.
For example, the CFPB has to consult with other bank regulators before issuing rules. They have to do small business assessments and subject themselves to small business panels. Their rules can be overturned by another body of the government, the Financial Stability Oversight Council. All of these things are unique amongst federal bank regulators. No other federal bank regulator has to go through those levels of oversight and scrutiny and accountability. Moreover, it is the only federal bank regulator that has a funding cap, again, making it more constrained than any other federal banking agency.
And finally, there is a kind of very thorough arrangement of oversight for this bureau. It is required to report to Congress twice a year with respect to its financial reports. It is required to testify before the Congress twice a year. The GAO is explicitly tasked with performing an independent audit of its operations. And of course, it is susceptible to an inspection general who is independent.
And in all of these ways, Congress, in considering and ultimately enacting the CFPB provisions of the Dodd-Frank statute, made sure that this was a bureau that would be both transparent and accountable to the Congress, to the American people, in ways that are unprecedented amongst its federal banking regulatory colleagues.
So the sum of all this of course is that both because the American consumers need to have the protections that they deserve and because the President has nominated an extremely qualified, outstanding individual to be its first director, we believe the Senate should act in the best interest of the American people and confirm tomorrow Richard Cordray as the first director of the CFPB.
I’d be happy to take questions.
Q Neal, one of the concerns is raised by Senator Susan Collins who voted for Dodd-Frank, I believe, is that she thinks Congress should have oversight over the budget of this board. She said, in a time of crippling deficits, having the board be able to -- the bureau be able to decide its own budget up to $500 million doesn't make any sense. I’m wondering if you could address that, and also the fact that Senator McConnell said that Republican senators wrote seven months ago to the White House noting -- or maybe this is a better question for Jay -- but noting their concerns, and they have yet to hear back from the White House in an official capacity about those concerns.
DEPUTY SECRETARY WOLIN: I think on the funding thing, Jake, first of all, no federal bank regulator has appropriated funds. And the reason for that is we want to make sure that our bank regulators are free of political influence. And so they all have independence, and we think that, like all the others, in terms of raising the funds for their own operations, the CFPB should be treated similarly.
Unique among them, however, as I noted in my introduction, the CFPB does have a funding cap, and if they wanted any more money beyond that they will have to go to Congress to seek that money. That is more constrained than any other federal bank regulator.
And so we think it’s important, both because we want bank regulation in this country to be free of political influence, and we want to make sure that the CFPB is treated as much as possible similarly to its banking colleagues, that the provisions that are in the statute are appropriate.
Now, on the question of the letter from the 44 senators, I would say this: The Congress spent many, many months discussing what the appropriate governance structure of the CFPB should be -- I would say both Democrats and Republicans very much involved in those conversations. And in the end, Congress decided on a set of checks and balances; a governance structure that would have all kinds of accountability provisions that were, as I noted above, unprecedented.
And so Congress then passed that legislation; the President signed it. It is now the law of the country. And it’s our view that we should go ahead and implement the law of the country, especially when what we’re talking about here is a law that in very common-sense, very practical, very sort of real ways, is about protecting consumers from the kinds of complicated language and traps that they were all too often subjected to before the statute was enacted, and were, meaningfully, a cause of the financial crisis that we’ve just been going through.
Q One quick follow. Do you view the concerns raised by Republican senators as legitimate, principled concerns about this bureau, or does the Obama administration view this as obstructionism and they just oppose the bureau and they’ll do everything they can do stop it?
DEPUTY SECRETARY WOLIN: Look, I think Congress had an opportunity and did, in fact, have a very robust discussion about what the appropriate governance and accountability structures for this agency would be. Most of these concerns were not raised at the time. In fact, one of the things that some Republican senators have objected to is having a single head of the agency. Now, they haven’t objected to the fact that the Office of the Comptroller of the Currency, which is another very important bank regulator, has for 100 years had a single director. And in fact, in the Dodd-Frank statute itself, not only was there no effort to make the Office of the Comptroller of the Currency subject to a multimember commission as its governing structure, but the OCC was actually given additional authorities. The Office of Thrift Supervision was folded into this entity that has a single director.
So, look, I think in the end, Jake, what’s important here is that the work of the CFPB is critically important for American consumers and for our economy. The Congress had a very robust, very thorough debate about what the structure should look like. They came up with a set of solutions that is unprecedented in terms of its level of accountability vis-à-vis any other bank regulator, and the President has put forward an extraordinary individual to be the first director. And we think we should get on now with the business of -- the Senate should get on with the business of confirming Mr. Cordray as director so that this agency can protect American consumers.
Q If Cordray’s confirmation does not go through, and getting him in place is as important as you all say it is, will the President consider a recess appointment?
DEPUTY SECRETARY WOLIN: Well, look, as Jay noted at the top, the Senate has a vote scheduled for tomorrow on Mr. Cordray. We think it’s important for the Senate to act. I would note, by the way, that at least one Republican senator has already announced his support for Mr. Cordray.
So the Senate should act on this matter. We think that the case for their doing so, both because of the importance of the substance and because of the quality of the individual, is overwhelming. And it’s not for me to speculate about what comes thereafter.
Q But, I mean, the vote is going to fail. I mean, there are 45 Republican senators who said they’re going to vote against it. The outcome of the vote is not really in doubt.
DEPUTY SECRETARY WOLIN: Again, let’s see what the vote is. It’s scheduled for tomorrow. The Senate should vote. As I said, again, I’ll repeat it, that one Republican senator has announced his support. Let’s see what happens. But it’s not for me here today to announce what comes thereafter. We hope that the Senate takes into account the importance of this.
And we should all take a step back -- because the question here is should the American people have commonsense, clear disclosure? Should they understand when they take out a mortgage, when they take out a student loan, when they buy a car and so forth, what are they getting themselves into and what aren’t they getting themselves into, or shouldn’t they?
And that's really what’s at the heart of this. When you abstract all of the rhetoric and you pull away from all of the tos and fros here, the question is, is that something that the American people should have, or shouldn’t they? And our view overwhelmingly, of course, is that they should.
MR. CARNEY: And if I could just add on that, Hans, everything I read at the top about what state attorneys general are doing and what mayors are doing -- this is not an exercise designed for anything except to put pressure on the Senate to do the right thing. And we’re doing it because we still believe there is a chance and there is a hope, and certainly the American people deserve this vote to clear the bar and for the obstructionist behavior to stop.
And what I also believe, Hans, politically, is that those senators who vote against or said -- they’ve come out and said they wouldn’t vote for anybody. So they will then have to explain to their constituents why they did not support commonsense reforms, the implementation of the kind of consumer protections that Neal was talking about. So there’s some time now for them to reconsider that position, and we hope they do.
Q Well, what they're saying about that is that you just go ahead and have the commission, right, set it up like the FTIC, set it up like -- I mean --
MR. CARNEY: I just refer to what Neal said about all the deliberations that went into the governing structure.
Q -- assuming that the vote --
MR. CARNEY: You're saying this as though we should then never have a vote, never hold senators to account and never have them on the record for their opposition to something the American people overwhelmingly support.
Q So is this just an exercise in holding their feet to the fire?
MR. CARNEY: No, I think that politics is a wondrous thing, and sometimes opinions change.
Q Thanks. Two questions. One is, do you think that essentially what the Republican opposition to this has done is forced sort of a relitigation of this entire debate, both on their side, trying to open up what the law says, and on your side, making the case, again, as you did initially? I mean, is this essentially redoing that debate?
And the second question I would have is, why didn't you guys nominate a director sooner when -- before they sent this letter and before when you maybe had a little more momentum coming out of passage?
DEPUTY SECRETARY WOLIN: Look, on redoing the debate, I think -- the statute passed. It is the law of the country. And we think we should get on with implementing it. It’s not just an academic exercise. It’s not just a political exercise. It’s an exercise about protecting American consumers and ultimately our financial system from the kinds of catastrophic outcomes that we’ve all just experienced. This is very real, very tangible, very present.
I think one has to ask themselves the question of who is it that the Senate Republicans are trying to protect. It’s clearly not the American consumers, because having a director is critical to making sure that consumers have the protections they need with respect to payday lenders and mortgage servicers and so forth.
It’s clearly not the banks, because the Consumer Financial Protection Bureau already has authority vis-à-vis the banks. And what is happening right now is there’s an unlevel playing field in which the banks are subject to supervision and enforcement and the non-banks are able to do the kinds of predatory behavior that caused this problem in the first place.
It’s not for the financial system, because we know that the financial system is going to be stronger when everyone is subject to these good, commonsense rules and supervision around those rules.
So the question is what is this about. And from our perspective, what this is about is making sure, as I said now a number of times, that our financial system and the American consumers are well looked after in the way that Congress, when they passed the statute in the first place, contemplated.
Q So who are they looking out for?
DEPUTY SECRETARY WOLIN: I think you have to ask them that question. I don’t know. I mean, because it doesn’t -- there’s no obvious -- there’s no obvious answer to me to that question. I think it’s a good question to ask.
Q Why didn’t you nominate someone sooner?
DEPUTY SECRETARY WOLIN: Well, it’s not for me to --
Q It’s been a year.
DEPUTY SECRETARY WOLIN: -- speak to that. But we have now -- the President has now nominated, and did some time ago, an exceptionally qualified individual, and he’s been pending before the Senate for a long, long time. And it’s time for the Senate to act.
MR. CARNEY: I agree with what Neal said. (Laughter.)
Jen and then Mark.
Q It's not for you to say?
MR. CARNEY: No, he went on to answer the question. Mr. Cordray has been nominated now for quite a long period of time. He’s enormously qualified, has the support of Republicans and Democrats across the country, and is the right person for the job. It was a very deliberate effort to find the right person for the job; we found the right person for the job. And a suggestion that you put forward, that Republican obstructionism was less fervent a few months ago than it is now, is a novel reimagining of recent history.
Q Has the President reached out to any of these Republican senators who are being targeted?
DEPUTY SECRETARY WOLIN: Well, I would say this: The administration broadly, at a whole range of levels, has been working very actively for a long time on Mr. Cordray’s nomination, reaching out to senators. And Jay has obviously outlined earlier what today’s elements are, but there has been plenty of outreach up and down the line. And Jay can comment more specifically.
MR. CARNEY: The answer is yes.
Q He has directly --
MR. CARNEY: The President -- well, the White House has. I mean, I don’t have any specific communications to read out that the President has had. But we have been actively engaged in trying to turn no to yes.
Q So there’s been direct contact this week with some of those Republicans asking for -- from the White House?
MR. CARNEY: Without giving a timeframe to it, within the context of this effort to get this confirmation, yes.
Sorry, I said Mark.
Q Can this agency function without a director?
DEPUTY SECRETARY WOLIN: Well, it’s doing awfully good work right now as I tried to describe, and I just gave a summary of it. But the point is -- and so it can do a series of things. But it is hamstrung in the sense that its full set of authorities are not available to it by statute until it has a director in place. And so the key element that it needs to focus on, and it cannot focus on until it has a director in place, is this non-bank sector and the financial services industry -- so payday lenders, mortgage servicers, credit card companies and so forth.
And these are places where a lot of damage was done to consumers and to our financial system in the years leading up to our financial crisis. So this is a place where we really need as a country to make sure that consumers are being properly protected and that they’re being brought within the regulatory fold so that we can avoid precisely what we’ve all just been through. That’s why I say this is not just a academic or a political exercise. This is one that’s very real and ought to be in the memories of every American. I mean, we live -- we're still living through that damage.
Q So what’s the most important, specific thing that the agency can’t do that it could do if you got Mr. Cordray approved?
DEPUTY SECRETARY WOLIN: It cannot supervise or largely enforce the rules that exist on consumer protection vis-à-vis non-bank entities -- so payday lenders, student loan providers, credit rating agencies, debt collectors, mortgage servicers unless they happen to be part of a bank.
So if it’s not a bank -- and millions and millions of Americans, tens and tens of millions of Americans, engage with those entities every day -- payday lenders, debt collectors, student loan companies, and so forth. And the CFPB does not have capacity, does not have authority, to supervise those entities until there's a director.
MR. CARNEY: Knoller, and then I’m going to let Neal go so I can take five minutes for other issues.
Q Neal, how did those provisions get written into the law? Usually, an agency is given powers, but here it’s the director himself, right?
DEPUTY SECRETARY WOLIN: Well, you know --
Q Did you realize it at the time you went along with the legislation?
DEPUTY SECRETARY WOLIN: Well, the legislative process, Mark, is obviously a very complicated thing. And some parts of it we contributed to directly and other parts, obviously, the Hill contributed to. It’s not how we would have done it, to be sure, but we knew from enactment that in order to get these additional powers there would need to be a director confirmed.
Q And, Jay, did this come up in the meeting with the Dem leadership?
MR. CARNEY: I don't have the readout of that meeting, yes.
DEPUTY SECRETARY WOLIN: Thanks, Jay.
MR. CARNEY: All right, Neal. Thanks very much.
I've got five minutes on other stuff.
Q Can I clarify something you said earlier?
MR. CARNEY: Yes.
Q You said that administration officials had contacted some of the senators' offices, but we have a statement we got earlier today from a spokesman from McConnell’s office that said they checked with all their members and they say no administration officials had called them.
MR. CARNEY: Well, I just know for a fact that’s not true.
Q Okay. Thank you.
MR. CARNEY: Yes.
Q Jay, I want to follow up on Matt’s question. There are times when the President will anticipate congressional action and say, if they do that, here is how I'll respond. Yesterday, he said, if there is any effort to weaken Wall Street reforms I'll veto it. So isn’t it viable or even in fact likely that if Cordray isn’t confirmed that he’ll be the subject of a recess appointment?
MR. CARNEY: We took this question, and I want to focus for today on what we don't believe is an exercise, and that we don't believe we should let Republicans who oppose this for the wrong reasons off the hook. They need to vote. And we hope enough of them will vote to confirm -- to allow this nomination to go through, and for Mr. Cordray to be confirmed. I don't want to get ahead of that important vote tomorrow.
Q And I know you said you didn't have a readout on the Senate Dems' meeting as it relates to this issue, but could you speak more broadly about what the President wanted to accomplish today with that meeting?
MR. CARNEY: With the Senate Democrats?
MR. CARNEY: There are obviously a lot of important issues going on in Congress, as I've talked about from this podium. The President and every member of his team will be engaged in working with Congress to try to get the many issues that need to be resolved before Congress adjourns on its vacation completed in time.
MR. CARNEY: Syrian President Assad denied in an interview with Barbara Walters that he's ordered a crackdown on his people, and he said, “Only the crazy leader kills his own people.” Does the White House put any credibility in these kind of claims?
MR. CARNEY: No.
Q Response to it, Jay?
MR. CARNEY: Well, I mean it’s just not credible. Everyone is -- the world has witnessed what’s happened in Syria. The United States and many, many other nations around the world who have come together to condemn the atrocious violence in Syria perpetrated by the Assad regime know exactly what’s happening and who is responsible. And I don't think anybody who watched that interview would find Mr. Assad’s answers credible.
MR. EARNEST: Jay has got time for two more.
MR. CARNEY: Two more. Landler and Kristen.
Q Do you have any additional information on President Zardari’s trip to Dubai for medical treatment, whether that is, in fact, what it is, or whether, as some have suggested, there’s more going on?
MR. CARNEY: Well, I don’t have anything beyond to say that we have seen the reports, we’ve heard what the -- I guess the government spokesman has said. And we certainly hope -- wish him a speedy recovery from his medical condition.
Q Does the White House have a reaction to Babbitt’s resignation beyond what --
MR. CARNEY: No.
Andrei -- we’re moving so fast. I’ll go to Andrei, and then yes.
Q Because of the election in Russia, I was looking at the issue of voting rights, and I came across an NAACP report here out this week, and they described in very dramatic terms the efforts to suppress voting rights for African Americans, Latino Americans throughout this country, in 34 states. Sounds counterintuitive to me, given the current President at the White House. My question to you is, are you aware of that, and if so, what are you doing about it?
MR. CARNEY: Well, I would refer you to the Justice Department. We obviously take very seriously any effort to disenfranchise Americans or somehow restrict or prevent them from voting. So that’s a very serious matter. And I believe the Justice Department can answer more fully with regard to specific issues around the country in that regard.
Last question. Yes.
Q Jay, is the President aware of the role of DEA in money-laundering with the Mexican drug cartels, as was reported in The New York Times on Sunday? I mean, if not, he is requesting information, and is aware -- when he was first informed about it?
MR. CARNEY: Informed about?
Q The role of the DEA on the money-laundering for the Mexican drug --
MR. CARNEY: I’ll have to take that question. I haven’t had that discussion with him, and I just don’t know the answer.
10:58 A.M. EST