At the eleventh hour, only days before the Consumer Financial Protection Bureau opens, President Barack Obama officially nominated Richard Cordray to serve as director of the CFPB. But the appointment still requires Senate confirmation, and that will take time.
That time could be well spent on efforts to improve the structure of the bureau to make it as effective and successful as possible.
If the CFPB were led by a bipartisan commission instead of a single director, it would minimize the possibility of the bureau taking extreme positions and adopting rules with harmful unintended consequences.
A single director is just fine, as long as you like what he or she is doing; but if you don't, you will be out of luck for five years. The financial services marketplace-and ultimately consumers-will suffer the consequences. A commission provides checks and balances and offers differing perspectives, which will result in more balanced and judicious regulatory action.
Right now we have the opportunity to improve the structure of the agency since there is not yet a director in place and the bureau is in its formative stages.
A commission or board model has been effectively used in various forms by a large number of federal agencies, including the Federal Trade Commission, the Federal Deposit Insurance Corporation, and the Securities and Exchange Commission.
Even the Consumer Product Safety Commission, which was the model Elizabeth Warren used for the creation of the Bureau, is headed by a commission.
The argument that this idea a "knife in the ribs" of the CFPB, or even that it would render the bureau toothless, has no basis in fact. What it would do is create a more balanced and judicious agency with less risk of over- (or, by the way, under-) reaching.
The CFPB's stated purpose is to be an "independent and transparent" entity for consumers and its achievements to date should be applauded. One area in which the bureau has already made significant progress, is the consolidation and simplification of the Truth in Lending Act mortgage disclosures and the Real Estate Settlement Procedures Act disclosures to eliminate the cost and confusion arising from the need to comply simultaneously with these different laws which impose similar requirements.
Another important goal of the CFPB is to level the playing field of financial services regulation by providing comprehensive federal oversight of the tens of thousands of non-depository financial service providers.
Banks have long been heavily regulated, while others have been able to fly beneath the radar, to the detriment of American consumers. It is time this changed. But the authority under Dodd-Frank to supervise nonbank financial companies for compliance with consumer financial laws-a critical function of the bureau-- does not come into existence without a confirmed director. Until then, there will be no level playing field.
The absence of a confirmed director is a detriment in several other respects. As long as there is no confirmed director, it is not the independent agency intended by Congress, but an arm of the Treasury, run by the Secretary of the Treasury. Most importantly, the absence of a director coupled with the enormous powers of this new agency has created a time of great uncertainty for retail banking. With its doors officially open and still no director in place, this state of uncertainty will continue unabated.
Once in place, the director answers to no one and has enormous authority to affect businesses, markets and the consumer's retail financial experience-for good or ill-for years to come.
Richard Hunt is the president of the Consumer Bankers Association.