By Peter Schroeder - 07/16/13 11:54 PM EDT
Senate Republicans on Tuesday ended their two-year blockade of the Consumer Financial Protection Bureau, conceding defeat until they are back in power in Washington.
Twelve GOP senators on Tuesday joined Democrats to confirm Richard Cordray in a 66-34 vote, giving the agency a fully empowered chief for the first time in its short history.
But Republicans backed down in the face of Senate Majority Leader Harry Reid’s (D-Nev.) threat to limit the filibuster through the “nuclear option,” striking a deal to approve Cordray and other nominees.
Sen. Richard Shelby (R-Ala.), who led the effort to thwart Cordray’s confirmation, was blunt about the GOP’s defeat.
“We didn’t get anything,” Shelby said. “We lost our leverage, if we had any.”
Shelby served as the ranking member of the Senate Banking Committee in the 112th Congress, when Republicans first announced they would not consider any director for the CFPB, regardless of qualifications, without major changes to the bureau’s structure.
The move fueled one of the most contentious fights in Senate history, with Democrats and consumer groups accusing Republicans of obstructing an agency that was authorized by the Dodd-Frank financial reform law.
Business and banking groups argued the structure of the bureau gives far too much power to the director and said there should be more checks on the sweeping regulatory powers of the agency.
Arguing the CFPB lacked accountability, Republicans wanted to see the director position replaced with a bipartisan commission. They also called for the bureau’s budget to be placed under the control of appropriators and sought to give other regulators more veto power over CFPB rules.
Senate Republicans reiterated those demands in the new Congress, describing the agency as enjoying “an unprecedented lack of oversight and accountability,” in part because the bureau’s funding comes solely form the Federal Reserve.
Republicans insisted Tuesday that changes to the CFPB are still badly needed but acknowledged their most potent tool for forcing action is now gone.
“Obviously a significant amount of leverage has been removed,” said Sen. Mike Crapo (R-Idaho). “But I believe that the arguments in favor of reforming the agency are still very powerful.”
Now, Republicans are eyeing electoral gains in 2014 and 2016 as their best hope for bringing change to the CFPB.
“I think the ’14 election is very important to us,” Shelby said. “If we got control of the Senate … that’d be one thing. But we also need a president, and that’s ’16.”
In the meantime, Republicans plan to pursue more modest tweaks to the CFPB that might attract bipartisan support.
Shortly after Cordray cleared the necessary 60 votes on Tuesday, Sen. Rob Portman (R-Ohio) unveiled legislation that would create an inspector general specifically devoted to the CFPB who would be confirmed by the Senate.
Portman, who was one of two Republicans who did not join the effort to block Cordray’s nomination, said he had heard zero opposition to the idea and hoped it could gain traction.
Sen. Chuck Grassley (R-Iowa) pushed the idea on the Senate floor Tuesday before Cordray’s final confirmation vote, nothing that the nomination was the “only tool” senators had to push changes in the CFPB.
“As we consider this nomination, I hope we will remember that and consider the Senate’s role in overseeing the CFPB and what steps we can take to make the CFPB more transparent and more accountable,” he said.
Portman said Cordray assured him and other Republicans that he would take steps to address their concerns before the confirmation vote.
Portman said the CFPB would agree to discuss the agency’s budget with the Senate Appropriations Committee, though it couldn’t come in a formal hearing. The Dodd-Frank financial reform law specifically states that the bureau’s funding “shall not be subject to review” by appropriations panels.
Portman also said Cordray had agreed to subject CFPB regulations to cost-benefit analysis, although the bureau would not confirm that claim.
Sen. Bob Corker (Tenn.), the other GOP lawmaker who did not sign on to the blockade, said he was hopeful a move away from the tense standoff over the CFPB could open the door to future changes down the road. But even he acknowledged that it would be a while before any tweaks can even be discussed, let alone advanced.
“I don’t think over the next several months it’s going to be topic du jour, OK?” he said. “But I think the goodwill that’s been created by [the compromise] possibly, I don’t want to say probably, possibly translates into some changes.”
He said he was confident some Democrats would back changes to the CFPB’s structure but they would not agree to do so “in an atmosphere of extortion.”
Sens. Jack Reed (D-R.I.) and Elizabeth Warren (D-Mass.), two staunch backers of the CFPB, said Tuesday they would be willing to consider minor fixes to the agency but made clear that the major changes sought by Republicans were not on the table.
“We built a good strong agency, and no one is looking to weaken it,” said Warren, the architect of the bureau. “I think we just stand firm there.”