Domestic Taxes

Obama’s pick to head consumer agency steps under the congressional spotlight

The Senate Banking Committee will return from the August recess with a bang, opening up Tuesday with a confirmation hearing for one of the most contentious spots in Washington.

The panel will consider the president’s selection of Richard Cordray to become the first director of the Consumer Financial Protection Bureau (CFPB). The former Ohio attorney general finds himself in the middle of a major congressional tug-of-war, as both sides fight over how the brand-new agency should function.

{mosads}When President Obama passed over Elizabeth Warren to tap Cordray as the CFPB’s first director, it came as a surprise to some. Warren had served as a very public face for the agency for over a year, and was seen as a “make or break” candidate for director by many liberal groups that intensely supported her.

However, Warren’s outsized role at the bureau and a few highly publicized spats with congressional Republicans meant the president ultimately made a less volatile, more low-key pick in Cordray, who was one of Warren’s top lieutenants at the nascent agency and is not nearly as widely known.

But when he appears before the Senate panel, he’ll be stepping right back into that glare, knowing full well he’s got a tough road ahead of him. That’s because a filibuster-proof bloc of Republican senators headed off the White House in May, announcing their plans to block any nominee to head the bureau unless several changes were made to it.

There is no indication that the opposition of 44 GOP senators is wavering. In fact, they argue that the nomination of Cordray is pointless now, as any selection will be ignored without those changes in place.

“Opposition to or support of Mr. Cordray’s nomination will become relevant as soon as the president agrees to make the structural changes we’ve requested,” said Jonathan Graffeo, the spokesman for Sen. Richard Shelby (R-Ala.). “Until then, Sen. Shelby and his colleagues stand firmly behind the statement they expressed in their May letter: No accountability, no confirmation.”

Republicans have made clear they are serious about the blockade by ensuring Congress spent the August recess in pro forma sessions to block the president from making any recess appointments, including Cordray.

On the GOP wishlist is subjecting the bureau’s funding to the congressional appropriations process and allowing other federal financial regulators to overrule bureau efforts if they think they will harm the safety and soundness of banks.

They also want to overhaul Cordray’s position. Instead of a single director, they want to see the CFPB run by a board.

Republicans contend that the changes they’re asking for do nothing to roll back the powers granted to the CFPB under Dodd-Frank. The bureau will retain all its existing powers under the GOP-preferred arrangement, but the structural changes would simply assure it is held accountable.

Along these lines, Republicans have yet to launch any major campaign against Cordray as a potential director.

But no Democrats, in the White House or in Congress, have shown any interest in making those changes. And now they, and other consumer advocates, are lining up behind Cordray and against GOP demands they say would weaken the bureau out of the gate.

In a recent editorial, Rep. Barney Frank (D-Mass.) said Cordray can expect a “Republican mugging.”

The ranking member of the House Financial Services Committee said Cordray’s qualifications have not come into question, but rather he is falling victim to a Republican effort to re-legislate Dodd-Frank after the fact.

“Senate Republicans are not entitled to use the confirmation power as a bludgeon to get their way when they cannot do so through the normal legislative process,” Frank wrote in The Washington Post. “We’re going to see an extraordinarily qualified administration to an important consumer protection agency be trashed by the Senate Republican minority because their primary goal is to ensure that financial institutions are not troubled by what they may see as an excessive concern for consumer fairness.”

And a number of groups have lined up behind Cordray, urging a swift confirmation so the CFPB can begin all its work.

A coalition of 64 groups and individuals from Cordray’s home state wrote to Senate Banking Chairman Tim Johnson (D-S.D.) and Shelby on Thursday to sing Cordray’s praises. They called him a “strong but fair enforcer who worked in a nonpartisan manner” while serving as the state’s top cop. The signers included the mayors of the state’s biggest cities: Cleveland, Cincinnati and Columbus.

Cordray backers argue that after the financial crisis, a bureau devoted to consumers is needed now more than ever. And given that Republicans largely opposed the CFPB when it was considered under Dodd-Frank, they are skeptical about efforts to reform it from those same critics.

Tags Elizabeth Warren Tim Johnson
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