The Daily Caller

The Daily Caller
WASHINGTON, DC - SEPTEMBER 06:  Richard Cordray testifies during his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee on Captiol Hill September 6, 2011 in Washington, DC. Former Ohio Attorney General Cordray has been nominated by President Barack Obama to be the first director of the United States Consumer Financial Protection Bureau.  (Photo by Chip Somodevilla/Getty Images) WASHINGTON, DC - SEPTEMBER 06: Richard Cordray testifies during his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee on Captiol Hill September 6, 2011 in Washington, DC. Former Ohio Attorney General Cordray has been nominated by President Barack Obama to be the first director of the United States Consumer Financial Protection Bureau. (Photo by Chip Somodevilla/Getty Images)  

Senators spar over Consumer Protection Bureau nominee

Partisan wrangling over the nascent Consumer Financial Protection Bureau continued Tuesday at the appointment hearing of President Obama’s pick for director of the new federal agency.

At Tuesday’s hearing of the Senate Committee on Banking, Housing and Urban Affairs, Democrats accused Republicans of “hijacking the legislative process” to block the appointment of Richard Cordray, Obama’s appointee, while Republicans said they were fighting to install meaningful checks on the office’s power.

Cordray, a former Ohio Attorney General, has been held up in the confirmation process since July — caught in the middle of a bitter battle over the new federal agency.

The agency, created by the Dodd-Frank Act in response to the 2008 financial crisis, will have authority to regulate banks, mortgage lenders, credit card companies and other financial services in an attempt to protect consumers from predatory business practices.

Democrats tout the agency as necessary to reign in an out-of-control financial sector, but Republicans say the CFPB has too much power and too little oversight.

More than 40 Republican Senators signed a letter to President Obama in May threatening to block the nomination of any CFPB director without including “structural changes that will make the Bureau accountable to the American people.”

“One of our nation’s founding principles is that the government should be accountable to the people,” said Alabama Sen. Richard Shelby, the ranking Republican on the banking committee. “Yet, the majority structured the Bureau to grant its Director unprecedented authority over the lives of the American people without any effective checks.”

Specifically, Republicans said there is little opportunity to overturn the CFPB director’s decisions, and that there is not an appropriate structure in place to remove an acting director. The current process, Republicans said, makes challenging the director’s decisions so onerous as to be useless.

Democrats said the complaints are smokescreens to keep the agency from ever getting off the ground. Without a confirmed director, Democrats said, the agency will have some supervisory power over larger banks, but none over small payday lenders and creditors, effectively neutering the agency.

“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,” Banking Committee Chairman Tim Johnson said.

“The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for [the] job,” Sen. Johnson continued. “Instead, a vocal minority is playing games with the process and holding Mr. Cordray’s nomination hostage.”

For his part, Cordray said he would follow the law to the letter, work with businesses and avoid increasing the regulatory burden on them. He pointed to his close work with Ohio banks and law enforcement.

Cordray has garnered the support of both the Ohio Bankers League and the Ohio Credit Union League. He also has the support of current Ohio Attorney General Mike DeWine, who defeated Cordray in the 2010 elections.

Obama passed over firebrand Elizabeth Warren to tap Cordray to head the bureau — a move that disappointed consumer advocates and many on the left, but appeased worried business groups.

New York Sen. Chuck Schumer called Cordray the “epitome of a public servant” and said “it will be bad for the country if he remains a pawn in a cynical Washington game.”

Republicans never questioned Cordray’s experience or qualifications. Nevertheless, they said checks on power must be put in place before they would acquiesce.

“You’re caught in a big, substantive debate here, and that’s going to have to be resolved before this nomination can go forward,” Shelby said.

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  • thamesford

    The key point is not the “required checks”. It is that the CFPB is a “Bureau” within the Federal Reserve, which is not part of the Government or part of its appropriations process.

    Remember, Congress is trying to have regulations in place to audit the Fed. This “bureau” is not a government agency.

    Within the “Dodd-Frank” bill it states:

    “…the board of Governors [of the Fed] shall transfer to the Bureau from the combined earnings of the Federal Reserve System, the amount determined by the Director to be reasonably necessary to carry out the authorities of the Bureau under Federal consumer financial law…”

    This “bureau” can right its own rules and demand the funding from its parent organization from an institution that has the right to print money.

    It is also incented to spend as much money in the first three years (2011, 2012, 2013) as it is restricted to annual increases (but not toal spending), respectively of 10%, 11% & 12%. The latter being for every year thereafter 2013.

    This is a self funding, self directed bureaucracy with very limited accountability to the Congress or the people.

     

  • Anonymous

    This position is much too importnat and powerful for a political hack like Cordray to allow to sit in that chair.

  • Anonymous

    Borrow the money and then repay the money – sounds simple enough.      http://bit.ly/qIjnPW

  • Anonymous

    The new president will have so much work to do Jan 2013 he may need to take as many vacations as obambi..

  • Anonymous

    Funny how the Democrats scream about parliamentary tactics being played that are exactly the same as Harry “Cowboy Poetry” Reid played when he was minority leader.

    The complainers show a stunning lack of understanding of the Senate’s majority rule/minority rights foundations.

    What a bunch of phony ponies these Democrats are!