Politico reports President Obama’s new Consumer Financial Protection Bureau (CFPB) and its proposed director were held in partisan gridlock at Senate confirmation hearings Tuesday. Sen. Richard Shelby (R-Ala.) reiterated his plan to block former Ohio Attorney General Richard Cordray from leading the agency, unless the CFPB is restructured as a commission under greater congressional control. “One of our nation’s founding principles is that the government should be accountable to the people,” Shelby said in his opening statement. Senate Banking Committee Chairman Tim Johnson (D-S.D.) scolded his Republicans for holding Cordray “hostage,” saying “Congress created the CFPB to be a robust and independent agency,” noting accountability exists because the president can fire the bureau director and its budget is capped. The CFPB began official operations in July, but its authority to issue rules and guidance are restricted without a Senate-approved director in place. The financial sector has a colossal stake in the hearings, since Cordray and the CFPB could dramatically reshape how mortgages, loans and credit cards are offered to the public. “This is akin to a Supreme Court nominee for us,” said Richard Hunt, president of the Consumer Bankers Association. “I believe this director has more power at any agency since J. Edgar Hoover.” Cordray tried to assuage concerns that the CFPB would often use litigation as a tool, which he did as Ohio’s Attorney General. Lawsuits “can be a very slow, wasteful and needlessly acrimonious way to resolve a problem,” Cordray said, “Our bigger and more flexible toolbox includes research reports, rulemaking, market guidance, consumer education and empowerment, and the ability to supervise and examine both large banks and many non-bank institutions.” Cordray’s statement exacerbated worries in the banking community, because it suggested a degree of heightened oversight by an agency with independent funding from the Federal Reserve that lacks Congressional control.
(Photo credit of Richard Cordray: Politico)