GOP Blocks Cordray, Limits CFPB
Senate Republicans on Monday promptly rejected President Barack Obama’s nomination of Richard Cordray to run the Consumer Financial Protection Bureau, a move that is likely to severely limit the power of the new federal agency.
There was some speculation that Cordray, a Democrat and former Ohio attorney general, would receive a friendlier reception from the GOP than Elizabeth Warren did. A White House adviser who helped design the CFPB, Warren is popular among liberal advocacy groups and was thought to be Obama’s first choice. Moving on to Cordray has not swayed Republicans, for whom Warren has been a lightning rod.
But Warren has not been the chief problem for GOP Senators, who have repeatedly insisted that Obama make specific changes to the CFPB before they remove their blockade on any nominee to run the agency.
“For months he has ignored Republican concerns about the lack of accountability at the [CFPB] and its potential adverse effect on the economy. Until President Obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it. No accountability, no confirmation,” Senate Banking ranking member Richard Shelby (R-Ala.) said in a statement provided to Roll Call.
The CFPB is charged with protecting consumers by regulating their interaction with financial institutions, such as banks and credit card companies. But Republicans believe that the financial regulatory overhaul law that created the agency gave it too much unchecked power.
Blocking Cordray — or any other nominee — will have the effect of denying the CFPB the ability to regulate non-banks, such as pay-day lenders and student loan providers. Because of how the financial overhaul law was written, an agency director is needed to implement those regulations.
“Until a Director is in place, the CFPB will not be able to level the playing field for responsible community banks and credit unions,” Senate Banking Chairman Tim Johnson (D-S.D.) said in a statement, acknowledging that the new agency will be hamstrung without a director.
In May, 44 of the 47 Senate Republicans, including Minority Leader Mitch McConnell (Ky.), sent a letter to Obama vowing to block any nominee to serve as director of the CFPB absent key changes, including eliminating the director’s position in favor of a board and forcing the agency to be dependent on Congressionally appropriated funds for its operating budget.
But since news of Cordray’s nomination broke Sunday and was announced Monday afternoon, the administration has yet to reach out to Shelby or other top Republicans on this issue, according to Republican sources. Cordray has assisted Warren in setting up the CFPB, which the law requires to be fully operational within one year of being enacted. That anniversary is Thursday.
The White House declined to discuss whether Obama might sidestep the Senate by making a recess appointment or any plans the administration might have to lobby GOP Senators to drop their hold on this nomination. But press secretary Jay Carney on Monday suggested that the administration saw Cordray’s nomination as a way around the Republican antipathy to Warren.
“I need not remind you what Republicans in the Senate have said about the possibility of a confirmation for Elizabeth Warren and their absolute refusal for that. … The obstacles here are clear. And as you noted, the obstacles are — you know, are blanket, at least according to Republican Senators,” Carney told reporters.
The same consumer and liberal advocacy groups that had championed Warren to serve as director lauded Obama’s choice of Cordray, as did Democratic Members. However, Obama’s decision to move forward without Warren at the helm was noted — in some cases bitterly.
“Richard Cordray is a sound choice,” Rep. Jackie Speier (D-Calif.) said in a statement. “But make no mistake — American consumers are losing perhaps their greatest champion in Elizabeth Warren.”
Warren is thought to be exploring a run in Massachusetts against Republican Sen. Scott Brown.
A Democratic Senate aide didn’t express much hope for Cordray’s confirmation but said an effort would be made to loosen the GOP blockade.
“Given Sen. Shelby’s remarks, it seems like he’s pretty dug in. But I think that we’re going to do our best to move this nomination forward,” the aide said.
One potential Democratic strategy calls for pushing Sen. Rob Portman to break ranks with the Republicans and support the confirmation of his fellow Ohioan. Portman was one of the 44 Republicans to sign the May letter to Obama. Sen. Sherrod Brown (D-Ohio) suggested Sunday in a Buckeye State newspaper report that he expects his colleague to back Cordray.
Portman did not immediately dismiss the prospect. But a Republican source, describing Brown’s remarks as posturing in an attempt to corner Portman, said it was premature to assume the freshman Republican would back Cordray simply because they are both from Ohio.
Portman continues to harbor the same policy reservations regarding the CFPB that motivated him to sign the Shelby letter, as he made clear in a statement he provided to Roll Call on Sunday.
“As I have said since its inception, I have serious concerns about this new federal bureaucracy,” Portman said.