More On Legal & Compliancefrom The Advisor's Professional Library
- The Custody Rule and its Ramifications When an RIA takes custody of a clients funds or securities, risk to that individual increases dramatically. Rule 206(4)-2 under the Investment Advisers Act (better known as the Custody Rule), was passed to protect clients from unscrupulous investors.
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
President Barack Obama on Wednesday named Richard Cordray through a recess appointment as the director of the Consumer Financial Protection Bureau, a move that Senate Republicans cried is unconstitutional.
Senate Banking Committee Chairman Tim Johnson, D-SD, said after the recess appointment was announced that with Cordray leading the CFPB, “Americans will finally get the consumer protections they deserve. Cordray is eminently qualified for the job, as even my Senate Republican colleagues have acknowledged.”
Johnson said that “It’s disappointing that Senate Republicans denied [Cordray] an up-or-down vote, especially when it’s clear he had the support of a majority of the Senate.”
However, Sen. Richard Shelby, R-Ala., ranking GOP Republican on the banking committee, said that Obama “actually created one job today. Unfortunately, this new employee is an unaccountable bureaucrat who will have immense power over the economy.”
Added Shelby: “Obama’s philosophy is clear: government knows best, and the bigger, the better. In light of his record, it’s not surprising that he end ran the elected representatives of the American people to avoid accountability to them.”
Shelby and his Senate GOP colleagues have fought for accountability at the consumer bureau and blocked Cordray’s nomination in December. Joined by 44 of his Senate colleagues, Shelby sent a letter in May to the president requesting three commonsense changes to the bureau’s structure to make it more accountable to the American people.
Rep. Scott Garrett, R-NJ, chairman of the Congressional Constitution Caucus, as well as the House Financial Services Subcommittee on Capital Markets, called Obama’s recess appointment unconstitutional.
“President Obama is abdicating his oath and duty to preserve, protect and defend the Constitution of the United States by making an unconstitutional recess appointment of Richard Cordray to head the newly created CFPB,” Garrett said. “Due to the unique characteristics of the CFPB, which would be funded through the Federal Reserve, insulated from congressional oversight, and negatively impact almost every facet of American business, Senate approval of the CFPB director is the last and only check Congress has over this unaccountable agency.”
Lisa Donner, executive director of Americans for Financial Reform, said in a statement after Obama’s recess appointment that “consumers won today when President Obama defied Wall Street interests to make a recess appointment” of Cordray. Obama, she said, “stood with consumers and families in making this crucial decision.”
Now that the CFPB has a director, Donner went on to say, the CFPB “finally has its full authority to protect consumers everywhere in the financial marketplace, from a Wall Street bank to a payday lender or from a mortgage company to a credit bureau or anywhere else.”