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GOP Blocks Richard Cordray To Head Financial Agency
Senate Republicans on Thursday blocked President Barack Obama’s choice to head the new consumer protection agency that was designed to help curtail the excesses and abuses that led to the financial meltdown.
Republicans presented a near-solid front in filibustering the nomination of former Ohio attorney general Richard Cordray to be director of the Consumer Financial Protection Bureau. The agency was an essential element of legislation enacted last year to overhaul the financial system.
Only one Republican voted to advance the nomination. The 53-45 vote was short of the 60 needed to overcome GOP opposition.
Obama planned to comment on the vote late Thursday morning.
Republicans said they had no objections to Cordray, the agency’s enforcement chief. But for months they have made clear they would vote against anyone until the administration agreed to changes in an agency they contend has too much power and too little accountability.
Democrats accused Republicans of favoring Wall Street over the consumers the agency is supposed to protect and suggested the dispute could become an issue in next year’s presidential campaign.
“This is the first time in Senate history a party has blocked a qualified candidate solely because they disagree with the existence of the agency that’s being created by law,” said Senate Majority Leader Harry Reid of Nevada.
The agency officially opened its doors in July, but under law cannot carry out its full functions until a director is in place. It can enforce existing bank regulations, but cannot issue new rules affecting nonbank entities such as payday lenders and credit card companies.
The bureau on Wednesday did introduce a simplified two-page credit card agreement it hopes will be a model for the industry.
Republicans, who fought passage of what is known as the Dodd-Frank financial overhaul bill last year and continue to challenge some of its provisions, say their support for the agency hinges on replacing the director with a bipartisan board of directors; subjecting the agency to the congressional appropriations process; and giving more regulatory offices power to overrule agency decisions.
They said arbitrary agency rules could hurt consumers and cause bank failures. They also said there have been no negotiations with the White House on the future structure of the agency.
“The president knew about these concerns months ago and he chose to dismiss them,” said Senate Republican leader Mitch McConnell of Kentucky.
“That’s all today’s vote is about: it’s about accountability and transparency. It’s a debate about whether we think Americans need more oversight over Washington or less,” he said.
“This has nothing to do with Mr. Cordray,” said Sen. Susan Collins, R-Maine. “It has everything to do with accountability for how money is spent in government.”
Obama said this week he would veto any effort to delay, defund or dismantle the financial rules put in place last year.
“Every day we go without a consumer watchdog is another day when a student, or a senior citizen, or a member of our armed forces… could be tricked into a loan that they can’t afford,” he said.
Even if Republicans continue to filibuster the nomination, “we will never sign onto attempts to permanently gut this agency,” Sen. Chuck Schumer, D-N.Y., said Wednesday. “This is going to be a bellwether issue, not just today but throughout 2012 and into the campaign.”
Deputy Treasury Secretary Neal Wolin said at a White House briefing this week that delaying confirming Cordray would mean that “millions of American people will remain vulnerable to some of the same regulatory gaps that helped to create the financial crisis.”
He also disputed the argument that the agency lacks accountability, saying it must consult with other bank regulators before issuing rules, has to assess the effect of its rules on small businesses and can have its rules overturned by the Financial Stability Oversight Council.
Responding to GOP demands that Congress control the agency’s purse strings, Wolin said no federal bank regulators have congressionally appropriated funds. “And the reason for that is we want to make sure that our bank regulators are free of political influence.” The new agency is under the supervision of the Federal Reserve.
Already this year, one committee in the GOP-led House has voted to slice $200 million from the White House request for the Securities and Exchange Commission, which has a major enforcement role. The full House has voted to hold the Commodity Futures Trading Commission, which oversees derivatives, to $171 million, less than two-thirds of what Obama sought.
Cordray, a five-time “Jeopardy” champion, was nominated to be the agency’s first director in July, with Obama bypassing Elizabeth Warren, the Harvard University law professor and consumer advocate who was instrumental in conceiving and setting up the agency.
Warren, who drew sharp opposition from Republicans who considered her too much of an activist, is running for a Senate seat against Massachusetts incumbent Scott Brown, the only Republican to support Cordray.