Taps Cordray Over Warren for CFPB, Retreat From Protection on
Mergers Like Capital One's?
July 17 -- On July 21 the Consumer Financial Protection Bureau
takes responsibility for complaints against the large banks which
caused the global financial meltdown with their murky trade in
President Obama moved to nominate to head the agency not its founder
Elizabeth Warren but former Ohio Attorney General Richard Cordray,
who is said to have displayed a lack of commitment to go after large
banks, at least when they merge.
Inner City Press covered, and this
author was on a three person panel
with, Cordray on the topic of the CFPB, including how it is make sure
that the consumer complaint information is becomes in charge of is
considered when banks apply to regulatory approval for mergers,
including review under the Community Reinvestment Act.
the question, finally saying it could be dealt with down the road. By
contrast on a conference call Warren answered a question posed by
Inner City Press about the relation of the Bureau's complaint data
base and CRA review of mergers by the Federal Reserve Board and other
regulators by saying this would have to be addressed. Now, will it
example is the proposal by Capital One, the credit card company with
a slew of consumer complaints against it including the credit score
floor to its Federal Housing Administration lending, to acquire the
bank ING Direct for $9 billion and move into the top five owners of
US consumers' deposits, according to SNL Financial.
will not be applying to the CFPB for the required approvals, if the
CFPB does not make sure the consumer issues are part of the merger
review, things will have gotten worse than before the CFPB was
created as part of the Dodd Frank Act.
these questions will even be raised as Cordray is presented by the
White House on July 18, and then for Senate confirmation. Watch this
* * *
Says Bigger is Better, Politics &
-- The International
Fund is unabashedly
promoting the takeover of small banks by large ones, claiming that
its own work in “Emerging Europe” since the financial meltdown
shows that communities are better served by large banks, even if
based far away or in other countries.
Department Director Antonio Borges told reporters on Friday that
Belgium was smart to have pushed Fortis to being acquired by BNP
Paribas. He urged more such mergers.
Borges if the IMF proposed any safeguards at all, given that
concerns exist that when a local bank is acquired by one based far
away, there will be less reinvestment and accountability.
an “interesting question,” bragged that the IMF
organized a coordinated effort to get large banks to treat
communities, particularly in Emerging Europe, fairly, and that this
had worked. See IMF
Borges, invisible hand and safeguards on mergers not shown
to ask about attempts to encourage or require reinvestment, for
example in the UK -- but moderator Simonetta Nardin said there was no
time for follow up questions.
refused to answer two questions about Portugal, citing an
IMF policy against officials working on their own countries, and also
claiming that the IMF does not get involved in politics. What --
encouraging bank mergers is not political? Watch this site.
From the IMF's
you seem to be saying that bank mergers—small banks
being bought by big ones sort of unqualifiedly may be a good thing.
In some countries people think that local banks are more accountable,
that if you move the assets to a faraway headquarters that there's
less responsive. What do you say to that critique and is that
something that the IMF takes any account of?
ask a very interesting question, because this is a
problem we were faced with over the last few years. In many of the
countries of emerging Europe, you find banks that actually are owned
by other banks elsewhere and there were concerns that, as there might
be problems in the domestic countries of those banks that assets
would be pulled out from emerging Europe and they might suffer. And
the Fund, the IMF, invested quite a bit of effort to organize a
coordinated effort on the part of all these banks to behave in the
best possible interests of those economies, and I must say this was
quite successful, because as a result, these countries are now
recovering very well and their banks are operating well. So, if
anything, the experience of emerging Europe demonstrates that having
large, solid banks operate in your country may be an important source
of stability if things are properly managed.