WASHINGTON – The new Consumer Financial Protection Bureau has too much unfettered power and President Barack Obama’s choice to lead it will be blocked until the agency is made more accountable, Senate Republicans said Tuesday.
At a Banking Committee confirmation hearing on Richard Cordray’s nomination, Republicans did not assail the credentials of the president’s pick, a former Ohio attorney general. Instead, they complained that the bureau’s director will have too much independence and said other federal financial regulators would be unable to curb the agency’s actions, even if its rulings threaten to cause instability in the banking system.
“You’re caught between a big, substantive debate here, as you well know,” the panel’s top Republican, Sen. Richard Shelby of Alabama, told Cordray. “That’s going to have to be resolved, I think, before we move this nomination farther.”
Democrats said the bureau’s authority was comparable to other federal regulatory agencies. They said the GOP was breaking new ground in blocking a nomination because they oppose the agency involved, and said their delays were scuttling the agency’s ability to protect consumers who borrow money or make other financial transactions.
“The misleading claim of no CFPB accountability – drummed up by special interests and put forth by a vocal minority – should be exposed for what it is: An attempt to destroy the bureau’s ability to do its job of protecting American consumers,” said Sen. Tim Johnson, D-S.D., the banking panel’s chairman.
The clash echoed the fight over legislation regulating Wall Street – and creating the new agency – that the president and Democrats pushed through Congress last year in response to the 2008 financial crisis. It is also a front in the broad partisan battle over the stalled economy and Obama administration efforts to use federal spending and regulations to revive it, a debate that will be pivotal in next year’s presidential and congressional elections.
Obama nominated Cordray, 52, in July to head the bureau, just as it was opening its doors for the first time. The president had appointed consumer advocate Elizabeth Warren to help set up the bureau but decided not to nominate her to become its director in the face of strong opposition from Republicans, who considered her too much of an activist.
In May, 44 Senate Republicans signed a letter saying they will oppose any nominee without a revamping of the bureau. Democrats who control the 100-member Senate can only count on 53 votes to end delaying tactics – seven short of the 60 needed to do so.
Cordray has been the bureau’s enforcement chief in recent months and as Ohio attorney general brought headline-grabbing lawsuits against some of the country’s biggest banks over their foreclosure practices. In a bid to reach out to Republicans, Cordray also said that if confirmed, “I promise that you will have one person who will always be accountable to you for how we are carrying out the laws laid down by Congress, and I will always be keenly interested in your thoughts about how we should do our work.”