[Congressional Record (Bound Edition), Volume 157 (2011), Part 14]
[Senate]
[Pages 19082-19083]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           CORDRAY NOMINATION

  Mr. MERKLEY. Mr. President, tomorrow we will be voting on whether to 
close debate on the nomination of Richard Cordray as Director of the 
Consumer Financial Protection Bureau. This vote can be framed in terms 
of his qualifications, but that would be a mistake because folks on 
both sides of the aisle have noted he is exceptionally qualified for 
this position. He is a graduate of Michigan State University, of Oxford 
University, and the University of Chicago Law School, where he was 
editor in chief of the University of Chicago Law Review.
  In addition, he has held a number of public positions with honor and 
distinction as State representative, as Ohio's treasurer, as Ohio 
attorney general. Indeed, as Ohio's attorney general, he was an 
aggressive advocate for consumers. He recovered more than $2 billion 
for Ohio's retirees, investors and business owners and took major steps 
to help protect its consumers from fraudulent foreclosures and 
financial predators. What a terrific resume. He is an individual who 
has stood up for retirees, business owners, and investors. He has said 
fraud will not be tolerated. We will seek it out and we will penalize 
it and we will end it. In other words, it is exactly the resume of 
someone we would want to head a consumer financial protection 
department or division or bureau.
  Why are we voting tomorrow to end debate? Why don't we just have a 
unanimous consent agreement that we go to a final vote? The answer is, 
my colleagues across the aisle are objecting. They are objecting to a 
vote on his nomination not because he isn't qualified but because they 
want to prevent this agency from doing its job: protecting America's 
families against predators. I cannot think of many issues that are so 
important to the success of our families as making sure they are not 
subject to financial predators. Yet my colleagues across the aisle are 
opposing this nomination in order to protect the predators preying on 
America's families. That is just plain wrong. I hope they will change 
their position before tomorrow.
  Let's turn the clock back to 2003. In 2003, a new type of mortgage 
was invented in the United States. This was a mortgage that had a 2-
year teaser rate--a very favorable, low rate--so as to serve as the 
bait for mortgage originators to say to their clients: This is the best 
mortgage for you because it has the lowest rate. But what the 
originators didn't tell their clients was that after 2 years, that rate 
exploded to a very high interest rate--a predatory rate--and they 
couldn't get out of the mortgage because the mortgage had a little 
sentence in it that said they have to pay a huge penalty if they try to 
refinance this mortgage. That penalty was 5 or 10 percent of the value 
of the loan. Show me a working family in America who buys a house, puts 
down their downpayment, makes their repairs, gets moved in, and still 
has 10 percent of the value of the house sitting in the bank, able to 
pay a penalty so they can get to a fair interest rate after the 
interest rate explodes.
  So this new mortgage turned the humble, amortizing, family mortgage 
that had been the pathway for the middle class, for millions of 
American families, into a predatory trap that destroyed families and 
that created a lot of wealth for the 1 percent who run the system in 
our society. Have no doubt, that 1 percent got in, in every possible 
way. They said: Let's package these predatory mortgages and sell them 
and then let's take pieces of those packages and combine them with 
pieces of other security packages and resell them and

[[Page 19083]]

then let's develop a brandnew insurance industry that insures 
securities. This insurance is what is often called credit default swaps 
or derivatives, which are fancy names for insurance on these packages 
and mortgages. So then they said let's thereby make them very 
attractive to pension funds and investors across the world. This was so 
successful that those who were buying the mortgages were willing to pay 
a huge bonus to the mortgage originators to steer families away from 
the very successful, humble, amortizing, fixed-rate mortgage into this 
predatory, exploding interest rate mortgage, all the time posing as the 
family's counselor, saying it is my job to do what is best for you.
  Why did this predatory practice in 2003, that grew enormously over 
the next 4 years, continue to go on? What happened to oversight of 
fairness, and what happened to the agency that was supposed to shut 
down predatory practices? That agency was the Federal Reserve and the 
Federal Reserve is a very powerful organization. The Federal Reserve 
has two responsibilities: employment and monetary policy. Those are the 
traditional responsibilities, but they were given a third, which is 
consumer protection. Somewhere in that vast, powerful agency on the 
upper floor, the head of the Federal Reserve and his key advisers were 
hard at work on monetary policy, deciding what interest rates they 
would lend to our major banks, and they were hard at work, we would 
hope, on the employment side as well. But they seemed to have forgotten 
they were also responsible for consumer protection. That mission was 
set aside. It was put down in the basement of the building and the 
lights were turned off and the doors locked and they did absolutely 
nothing about these predatory practices that were destroying the 
finances of millions of Americans, that were betraying the fundamental 
relationship between a family and its trusted mortgage originator who 
was getting bonus payments for steering them into these loans. They did 
absolutely nothing about a number of other predatory practices.
  That is why the Consumer Financial Protection Bureau was created. It 
doesn't have other responsibilities to distract it. It isn't going to 
take the fate and success of our families and lock that mission down in 
the basement and turn out the lights because this is the heart of why 
this bureau exists.
  This vote tomorrow is about whether we believe in the family value of 
fair deals that build the success of our families or whether we believe 
in the 1 percent exercising full predatory practices to destroy the 
financial lives of Americans, destroy the financial lives of our 
veterans for standing up for us in war and who are often a highly 
targeted group when it comes to these types of mortgage practices and 
these types of payday practices.
  This is an important vote tomorrow. It is not a vote about the 
qualifications of the nominee because the nominee has the right set of 
skills to be highly qualified in a number of directions. It is a vote 
about whether, in America, one believes it should be OK to be a 
predator or not OK. I believe it is not OK. I believe States and the 
Federal Government should do all they can to make sure deals are fair, 
to make sure there are not conflicts of interest, to make sure there 
are not payments that are undisclosed to a customer, to make sure there 
are not hidden clauses to convince customers by their trusted advisers 
to sign documents which cause the destruction of families' financial 
lives over the next 10 to 20 years as a result of that trust. Fairness 
matters to the success of our families.
  We should have a unanimous vote tomorrow to end this debate and get 
on to the final vote of whether to confirm a very distinguished and 
capable and honorable man who is prepared to fight for the success of 
American families.
  I thank the Chair.

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