Senate spars over consumer agency nominee

Posted Sept. 06, 2011, at 9:20 p.m.

WASHINGTON — Senate Republicans expressed support Tuesday for President Barack Obama’s nominee to lead the new Consumer Financial Protection Bureau, but remained opposed to his confirmation without significant changes to the agency.

Their stance leaves the agency’s leadership in limbo and prevents it from using its full array of powers. Forty-four GOP senators have called for the bureau to be run by a five-member commission, rather than a single director, and for it to go through Congress for funding, rather than the Federal Reserve.

Sen. Richard Shelby, R-Ala., ranking member of the banking committee, said that Democrats have ignored those requests. Without those changes, Republicans have vowed to block any nominee.

“Neither the president nor the majority has made an effort to work with us to improve the accountability of the bureau,” Shelby said at Tuesday’s confirmation hearing. “It may be good politics for them, but it is certainly bad policy for the American people.”

Sen. Tim Johnson, D-S.D., chairman of the banking committee, accused Republicans of holding the nomination process hostage.

“The stability of our financial system, and of our economy, is simply too important to be put at risk by political games,” he said. “It’s time to allow the CFPB to do its job to the fullest extent of its authority.”

Republicans were careful to show that their criticisms of the agency did not extend to the candidate picked to run it: Richard Cordray, head of enforcement at the CFPB and a former “Jeopardy” champ.

On Tuesday, Sen. Bob Corker, R-Tenn., called a recent meeting with Cordray “pleasant,” and Shelby said the nominee had a “good background.” Lawmakers on both sides noted that Cordray’s 12-year-old twins, who sat behind him during the hearing, never seemed to stop smiling.

“You’re caught between a big substantive debate here,” Shelby said.

The CFPB was supposed to be the centerpiece of the financial reforms passed by Congress last summer, but it has been hamstrung by the political battle over its structure.

Officially launched in July, it consolidates responsibilities from seven existing government agencies. But many of its most potent new powers, such as the ability to write new rules or oversee nonbanks such as mortgage servicers or payday lenders, will not take effect unless a director is in place.

Cordray remained calm during the confirmation hearing, occasionally closing his eyes as he delivered complicated answers. He deflected questions about the political battle over his position and tried to assure lawmakers that he would be judicious in using the position’s powers.

“I can promise you, you would have one person who is accountable to you,” Cordray said. “I will always be keenly interested in your thoughts about our work.”

The tone of the hearing was a far cry from the fireworks that often followed Elizabeth Warren, the Harvard law professor who spent the past year setting up the agency and the Democrats’ top pick for the position.

Warren often said her job was to protect the agency against those trying to “defund, delay and defang” it. An appearance before a House committee this spring devolved into sniping between Warren and Rep. Patrick McHenry, R-N.C., over when the hearing was supposed to end.

Warren is exploring a Senate run in Massachusetts. In prepared testimony, Cordray thanked her for creating a “tangible, vibrant new agency.”

The banking committee is to vote on Cordray’s confirmation at a date to be determined.

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