Cordray confirmed, but CFPB accountability concerns remain

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Brendan Bordelon Contributor
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Richard Cordray sailed to an easy 66-34 confirmation as head of the Consumer Financial Protection Bureau (CFPB), despite the fact some Republicans don’t even believe his position should exist.

The vote on Cordray was part of a grand bargain to avert the “nuclear option” — a threat by Senate Majority Leader Harry Reid to change the Senate’s filibuster rules should Republicans continue to block President Barack Obama’s appointees.

Many Republican lawmakers had previously expressed misgivings over the CFPB’s structure, arguing that it gave the lone director too much power and made the bureau largely impervious to congressional oversight.

But on Tuesday, 17 Republican senators joined with Democrats to end debate on Cordray’s confirmation, including many who had previously been some of the CFPB’s biggest critics.

Roll Call reported that Ohio Republican Sen. Rob Portman convinced skeptical colleagues to greenlight the confirmation after extracting promises from Cordray to appear before the Senate Appropriations Committee and to implement a cost-benefit analysis of CFPB regulations.

Cordray is a fellow Ohioan.

“The political stalemate is over,” said Massachusetts Democratic Sen. Elizabeth Warren, who originally proposed the bureau and set up much of its current structure before she was elected to the U.S. Senate. “There is no doubt the consumer agency will survive beyond the crib.”

Obama first tapped Cordray to head the CFPB in July 2011, but concerns about the vast powers afforded the director and the agency’s unaccountable structure led Republicans to hold up his confirmation for nearly two years.

The president sought to circumvent that opposition in January 2012 by installing Cordray to the director’s slot while Congress was in recess. But after a federal appeals court declared similar appointments to the National Labor Relations Board as unconstitutional a year later, Obama was forced to resubmit Cordray’s nomination.

Now that he’s been confirmed, Cordray is likely to reauthorize many of the rules enacted during his directorship in order to head off claims that the unconstitutional nature of his initial appointment nullifies the decisions made over his tenure.

Opponents of Cordray and his agency vowed to press on: “We have a number of constitutional claims against the CFPB,” said Sam Kazman, general counsel at the Competitive Enterprise Institute and one of the principal lawyers in a lawsuit against the bureau. “Cordray’s confirmation does not affect most of our claims,” he told The Daily Caller News Foundation.

Kazman contends that the structure of the Consumer Financial Protection Bureau leaves the powerful agency unaccountable to any of the three branches of government.

First, the bureau director can only be removed for violating the law — not at the president’s discretion like most agency appointees. “While you sometimes find a provision like that for agencies that are headed by several people, such as a set of commissioners, it is very unusual for a single-headed agency,” Kazman said.

Then there’s the question of oversight by Congress. “[Congressional oversight] is usually done through a budgetary process,” Kazman explained. “In the case of the CFPB, it draws its own budget from the Federal Reserve. Congress does not hold the power of the purse over the agency.”

Finally, the judicial branch is limited in its ability to scrutinize CFPB decisions: “Court review of CFPB actions is much narrower than for other agencies, so you weaken that sort of accountability as well,” Kazman told TheDCNF.

“Standing alone, any of those structural problems could well be enough to invalidate the agency,” Kazman charged. “Here you’ve got all three combined, and frankly I think that makes the question of the CFPB’s validity much, much more serious.”

Some experts believe that the bureau’s lack of oversight has already led to abuse and overreach. TheDC News Foundation previously reported that the CFPB collects information on millions of Americans’ financial transactions, compiling a massive database consisting of nearly 900 million credit card accounts.

“It’s a lack of accountability in the bureau that has enabled it to set up these unprecedented surveillance programs,” John Berlau of the Competitive Enterprise Institute told TheDCNF.

“There should be lawsuits against the surveillance program itself,” he continued, “because it exceeds what Dodd-Frank permits and because it violates the Fourth Amendment on the same grounds as the National Security Administration’s overreach does.”

Berlau said it was “too bad” that Republican lawmakers “shunned aside these important constitutional issues in order to make a deal.”

“They shouldn’t allow the CFPB to nuke our privacy and our freedom in order to avoid the so-called ‘nuclear option,’” he concluded.

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