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.